Four companies whose products I use a lot: Adobe; Apple; Canon; and Microsoft.
A simple comparison of prices of products I use. The issue – what is the “Buy in Australia” impost (“tax” if you will) that companies are adding to products here that is driving purchasing by consumers to the grey import option?
Adobe
| Product | AUS | USA | Markup | ||
|---|---|---|---|---|---|
| (AUD) | (USD) | (USD) | AUDvUSD | USDvUSD | |
| Acrobat X Pro | 709.00 | 752.04 | 449.00 | 58% | 67% |
| Photoshop CS5 | 1168.00 | 1238.90 | 699.00 | 67% | 77% |
| Photoshop Elements 10 | 145.75 | 154.60 | 99.99 | 46% | 55% |
| Photoshop Lightroom 4 | 241.00 | 254.30 | 149.00 | 62% | 71% |
Apple
| Product | AUS | USA | Markup | ||
|---|---|---|---|---|---|
| (AUD) | (USD) | (USD) | AUDvUSD | USDvUSD | |
| iPad 3 | 539.00 | 568.75 | 499.00 | 8% | 14% |
| iPod Touch 8GB | 219.00 | 232.29 | 199.00 | 11% | 17% |
| 13″ MacBook Pro | 1399.00 | 1489.24 | 1199.00 | 17% | 24% |
Canon
| Product | AUS | USA | Markup | ||
|---|---|---|---|---|---|
| (AUD) | (USD) | (USD) | AUDvUSD | USDvUSD | |
| Canon 5D MkIII | 4399.00 | 4641.82 | 3499.00 | 26% | 33% |
Microsoft
| Product | AUS | USA | Markup | ||
|---|---|---|---|---|---|
| (AUD) | (USD) | (USD) | AUDvUSD | USDvUSD | |
| Windows 7 Home Premium | 299.00 | 318.29 | 199.99 | 50% | 59% |
| Windows 7 Professional | 449.00 | 473.78 | 299.99 | 50% | 58% |
| Windows 7 Ultimate | 469.00 | 499.25 | 319.99 | 47% | 56% |
Notes: USA values do not include sales tax (generally applied at city and state level). Software compared are downloads only.
FX rate leading up to the release of Windows 7 was 0.74… bringing your “markup” down to 10% – less GST which brings the Australian price down to equivalent $US200… Microsoft obviously now making a killing on FX, but it could have gone the other way – I don’t think they would have then put the price up…
You can probably make a similar argument for the other software packages. There’s always going to be a premium for hardware because of lower volumes and logistics…
@Stu: fair point, however, by not adjusting at least annually (up *or* down as appropriate) these vendors are doing their very best to kill Australian sales.
As for logistics – this would undoubtedly apply to Apple’s products too. Why then such a disparity between the markup of Apple’s hardware versus, say, Canon’s (just released)? Do Apple have a supply chain approach that smashes the crap out of Canon (I’ll do some further research on Sony, Motorola, Samsung too).
Apple’s volumes are much larger than Canon’s, especially when you consider that apple’s hardware is really just a delivery vehicle for them to make sh!tloads more money via software. Apple doesn’t need to make profit on the hardware in a given country to justify going there – the apps will take care of it.
They also might bot have different FX policies, hedges etc.
Reviews upwards of software prices based on FX might be a little unpalatable for the consumer… Reviews downwards might be unpalatable for the company especially if there is a lot of local support… easier to just “set and forget” the price based on the predicted FX rates over the life of the product.
@stu: erm, the profitability of Apple’s hardware is widely acknowledged in the industry. They’re not loss leading in that space (unlike, say, Microsoft XBOX or Sony PS3).
As for local support, erm, nope. Bugger all there. Try again.
Apple’s hardware is profitable, but it doesn’t need to be mega-profitable in one country to justify operating there – hence they can stay with a similar price adjusted for FX.
Microsoft have a significant local operation in Australia which I’m guessing would be funded out of local sales of Windows and other software…
@Stu: you’re comparing global companies, not local. Apple too have significant local operations. Canon, not nearly as much. Adobe too. Your argument is getting specious on this one. Global companies use all sorts of accounting bullshit to shift profits and costs to and from various nations to maximise their return to shareholders (Apple, Canon, Microsoft and Adobe included) so I’d discount that. Support is predominantly done globally these days for all but Apple, so unless it’s hourly-rates contracting, nope that one’s gone too.
At the end of the day there’s an impost on “Australian” sales (the Adobe packages, for example, are only recently released) that don’t exist elsewhere for the companies listed – except the one that you’ve often enjoyed claiming that they’re the worst in this space (overpriced or higher costs here or whatever).
At the end of the day, it’s driving consumers to parallel import, where they take on the impost of logistics and volumes, at the expense of local resellers. If I was retailing any of this, I’d be hounding those vendors with high markups to reduce RRP to global standards to ensure their viability.
Still haven’t successfully naysayed my argument on Microsoft “fix and forget” FX policy… and we haven’t even gotten into the fact that Australia Post makes a $20m/year loss on delivery of parallel imports which hides the true cost of logistics from consumers…
So apparently the Australian Government, after prompting from choice, is asking similar questions…
http://www.smh.com.au/technology/technology-news/parliament-probes-technology-price-gouge-20120428-1xrl2.html#poll