Price comparisons. US to Europe

[bob24]

I would make sure you remove VAT before comparing to US pricing. We do have sales tax in the US, but it varies by state and county. It's not applied at the federal level. It makes more sense to compare base prices without it if you want to determine similarity in retail pricing.

Other posters have done that already.

My experience is the same as theirs. It used to be the case that the European price was the same as the US price once VAT is excluded from both prices (maybe a few percents higher in Europe, but nothing much).

In the past couple of months that difference has increased significantly for no clear reason (This is also true with the M1 MacBook Air).

 

[Weeguy]

I didn't mean to throw the grenade into the room folks, honest. I just don't like being seen off by anyone trying to make a buck or two extra from us poor European people. Methinks that's enough debate on this one but having said that, I don't think I'll bother buying that 24" max after all. Now let's look at the mac mini...........

 

[4sallypat]

Even with a 1 year standard warranty, where I work, we still get support past the 1 year warranty as we buy a ton of Apple and have a direct line into Apple's Education enterprise support which typically they will repair/replace past the 1 year without AppleCare+.

We recently had 3 year old iPads (60 devices) go bad with swollen batteries and when we called this in, Apple Education took in all 60 and replaced them with new iPads - gen 8 - not under warranty but under an "education promise".

Also, I am glad I get to buy a personal device at a lower price thru Apple Education....

 

[za9ra22]

I didn't mean to throw the grenade into the room folks, honest. I just don't like being seen off by anyone trying to make a buck or two extra from us poor European people. Methinks that's enough debate on this one but having said that, I don't think I'll bother buying that 24" max after all. Now let's look at the mac mini...........

Personally, I don't regard the issue of the price differential as throwing a grenade in the room, though clearly some people get a bit defensive about it. But it has been an issue for many, many years, and never really satisfactorily explained.

Back in the days I still lived in the UK, when looking for a new Mac to replace an SE, I costed the potential for flying to the US, buying the model I wanted, and paying UK import and VAT on return, and it still came out much cheaper to do that than head for the nearest dealer and buy one off the shelf. That was 30 years ago.

There are, of course, 'hidden' costs that Apple face doing business in Europe, thanks to the EC, its rules and bureaucracy, and now additional complications as a result of Brexit when moving product around, plus corporate overheads and taxes, warehousing, handling and presumably a host of other costs, such as currency exchange rates, that play some part in the pricing differential, but at the end of the day Apple will charge what the market will bear for their products, because they're in business for profit, and the more of it the better.

I bet they have a rather large spreadsheet to forecast the price/profit vs sales volume curve for each market.

 

[The-Real-Deal82]

Personally, I don't regard the issue of the price differential as throwing a grenade in the room, though clearly some people get a bit defensive about it. But it has been an issue for many, many years, and never really satisfactorily explained.

Back in the days I still lived in the UK, when looking for a new Mac to replace an SE, I costed the potential for flying to the US, buying the model I wanted, and paying UK import and VAT on return, and it still came out much cheaper to do that than head for the nearest dealer and buy one off the shelf. That was 30 years ago.

There are, of course, 'hidden' costs that Apple face doing business in Europe, thanks to the EC, its rules and bureaucracy, and now additional complications as a result of Brexit when moving product around, plus corporate overheads and taxes, warehousing, handling and presumably a host of other costs, such as currency exchange rates, that play some part in the pricing differential, but at the end of the day Apple will charge what the market will bear for their products, because they're in business for profit, and the more of it the better.

I bet they have a rather large spreadsheet to forecast the price/profit vs sales volume curve for each market.

I think if the reason for the higher costs was Apple suddenly being made to pay their full taxes in the UK, people might feel favourably about it. Although these prices have always been higher even before tax avoidance amongst US companies was exposed a few years ago. I don’t see Apple products here as US imports though as they are manufactured in China and to a UK or European specification.

 

[grandM]

It wouldn’t surprise me some greedy importers are responsible for a fair percentage too. For android devices I have seen differences of 100 euro between Belgium and the Netherlands on a 250 euro device. These guys live in mansions claiming it’s so hard to import into a country.

A friend of mine owns some shops. You have no clue what margins are on items as cleaning stuff. The margins (100 percent is standard) would be even larger if they could circumvent the wholesaler.

Out of curiosity we looked up the balance sheets of the wholesaler. This guy accumulated millions simply by holding the sole key between the importer and the retailer.

In the case of apple though I am not sure if these entities are in between. Just felt like sharing this.

 

[Leon1das]

Apple is agreeing recommended retail prices with 1st line big retailers - with certain deviations allowed during sales periods...

If it didnt - price wars between retailers would be everywhere, leading to erosion of branding.. Apple would not allow that...

2nd line retailers and further resellers have much less devices on stock so they are seen as margin of error for Apple's P&L.

Price of product is the brand itself and that is why Apple (and other big manufacturers) keeps control of it...

In a nutshell - Apple does allow strong pricing difference of US vs Europe based on:

- US online prices do not contain tax. In Europe its 18-21% and is included in the price.

- US warranty is 1y, while in EU its 2y mandatory - limiting upselling of Apple Care in Europe.

- Finally: SKU management for Europe is more complex than for US. In EU - there is 10+ different keyboard layouts which decreases profitability - as product needs to be market specific. I will never understand why world doesnt switch to QWERTY everywhere - instead France having AZERTY, Germany QWERTZ etc...
US layout is simply the easiest to use...

But then again - Brits are driving on the left side of the road...

 

[Spindel]

As a swede if I deduct VAT and add that by law I have a replacement warranty for 2 years and another year on top of that in which the vendor has to try to fix a faulty product it isn’t that much more expensive. Than the same ”package” in the US.

Also people need to stop looking att the day exchange rates between currencies. Almost no company (selling consumer produkts) change their price more than at most a couple of times a year due to exchangerates. This means that companies at times make exchangerate profits and at other times make exchange rate losses. All companies optimize to make more exchange rate profits than losses.

 

[JouniS]

Apple is agreeing recommended retail prices with 1st line big retailers - with certain deviations allowed during sales periods...

If it didnt - price wars between retailers would be everywhere, leading to erosion of branding.. Apple would not allow that...

This is yet another American business practice that is borderline illegal in the EU. The EU really doesn't like anticompetitive business practices. Once Apple sells a device, it's gone, and the buyer may generally try to resell it at any price they prefer.

 

[Leon1das]

This is yet another American business practice that is borderline illegal in the EU. The EU really doesn't like anticompetitive business practices. Once Apple sells a device, it's gone, and the buyer may generally try to resell it at any price they prefer.

I am European and I appreciate getting the product at the lowest price like any other consumer..

But the practice of defining retail price is not illegal. Retailer CAN work on his own with margin - but manufacturer CAN pull out from supplying them...

If they sit and agree that uniform pricing will help product sell better - and will avoid price war as all retailers get the same conditions - it gets appreciated by retailers..

Big OEMs have this luxury - but if you are a start-up negotiating with retailers - they will probably eat you alive...

Plus dont forget - EU has parallel market trading allowed by law... Meaning one big retailer from Germany can kill smaller retailers in France by dominating with its size. That is additional reason why uniform pricing - from OEM to retailers - and retailers to consumers - can be seen as fair business practice....

 

[Leon1das]

As a swede if I deduct VAT and add that by law I have a replacement warranty for 2 years and another year on top of that in which the vendor has to try to fix a faulty product it isn’t that much more expensive. Than the same ”package” in the US.

Also people need to stop looking att the day exchange rates between currencies. Almost no company (selling consumer produkts) change their price more than at most a couple of times a year due to exchangerates. This means that companies at times make exchangerate profits and at other times make exchange rate losses. All companies optimize to make more exchange rate profits than losses.

Exactly what I am saying... with tax and 2y warranty - difference almost disappears...

 

[JouniS]

But the practice of defining retail price is not illegal. Retailer CAN work on his own with margin - but manufacturer CAN pull out from supplying them...

The general principle is that the manufacturer can set a suggested retail price, but there can be no penalties if someone chooses to sell at a lower price. The EU uses regulation as a tool for increasing competition, and the idea that a company might want to restrain competition to preserve brand value goes directly against that.

When I look at the list prices for various Macs at a major Finnish retailer, they are within a few percent of those available directly from Apple, but never identical.

 

[Leon1das]

The general principle is that the manufacturer can set a suggested retail price, but there can be no penalties if someone chooses to sell at a lower price. The EU uses regulation as a tool for increasing competition, and the idea that a company might want to restrain competition to preserve brand value goes directly against that.

When I look at the list prices for various Macs at a major Finnish retailer, they are within a few percent of those available directly from Apple, but never identical.

If you read - you will see I said nothing different...

Retailer cannot get penalized for going below the price point - but in return OEM cannot be penalized for being out of stock for that retailer... get it?

Or simply being late to deliver to them in time for Christmas sales...get it?

In reality - OEM (if big) is always in control..

From competition point: with advocating retail price in advice - OEM is actually keeping it fair for all. How?
Big retailer has higher volumes, and can survive with lower margin versus the small retailer... So without OEM control, big retailers can kill small ones.

And finally: every OEM wants that product quality sells the device, not a low rice...

If price starts to sell the product - that means that OEM finance team is overtaking business model - as marketing sucks and there are no other differentiators versus competition. It is never a good sign if company starts to be run by the governance function - instead of business function. Governance overtakes when shareholders are scared...

With M1 Macs that clearly is not the case...

P.S. I work for years for big OEM in global department - commercial and pricing for multibillion dollar busines and can speak on this for ages...

 

[JouniS]

Retailer cannot get penalized for going below the price point - but in return OEM cannot be penalized for being out of stock for that retailer... get it?

Or simply being late to deliver to them in time for Christmas sales...get it?

This is where you are wrong. The OEM can be penalized for trying to enforce a minimum / recommended price, regardless of the mechanism. Asus got a €60+ million fine for that a few years ago, and there were some other companies that also had to pay a fine at the same time.

 

[Leon1das]

This is where you are wrong. The OEM can be penalized for trying to enforce a minimum / recommended price, regardless of the mechanism. Asus got a €60+ million fine for that a few years ago, and there were some other companies that also had to pay a fine at the same time.

I stop here as its pointless or you dont read what I wrote...

I never said "enforce" but emphasized what is consentual business practice..

If things come to enforcement - there is no trust - and trust is a key word in business world...

Enforcements are business cases for the lawyers - not for business partners...

Asus obviously did not do this well, probably having wrong people in the needed positions..

And that shows - people make the company great... not the company itself..

 

[kobberrød]

Can somebody explain me why this “2yrs warranty“ is getting repeated every time? EU consumer rights are a completely different thing...

 

[JouniS]

I stop here as its pointless or you dont read what I wrote...

Maybe you should also read what I write a bit more carefully.

I never said "enforce" but emphasized what is consentual business practice..

If things come to enforcement - there is no trust - and trust is a key word in business world...

Enforcements are business cases for the lawyers - not for business partners...

"Consent" is irrelevant here, because you can't consent to illegal practices.

Asus tried to set minimum prices for its products, withdrew supply from resellers that sold at a lower price, and got fined for that. When the investigation began, Asus realized that what they had done was so obviously illegal that they cooperated, provided evidence to the investigators, and got a reduced fine for that.

And, as I mentioned, some resellers normally sell Apple products at slightly lower prices than Apple itself. Apple knows this and doesn't care, because it also knows that its interest in maintaining fixed price levels is not considered legitimate in the EU.

 

[deeddawg]

Can somebody explain me why this “2yrs warranty“ is getting repeated every time? EU consumer rights are a completely different thing...

Apart from it being on the retailer to handle vs manufacturer to handle, what's different in terms of what happens if the computer stops working after 23 months?

In the US the consumer is SOL if they hadn't purchased AppleCare+. Is the EU customer also SOL or does the system get repaired/replaced?

 

[Maconplasma]

Is anyone really suggesting that the difference would be close to $600?I find that very hard to believe.

Well if you don't know U.S tax then you can't make such a claim. U.S tax varies also depending on the state. This comes up all the time. UK cries about prices being higher than the U.S. but people don't do their homework and understand that the U.S. prices are never quoted with tax and for the exact reason I mentioned above.

 

[kobberrød]

Apart from it being on the retailer to handle vs manufacturer to handle, what's different in terms of what happens if the computer stops working after 23 months?

In the US the consumer is SOL if they hadn't purchased AppleCare+. Is the EU customer also SOL or does the system get repaired/replaced?

As I understand, consumer laws cover delivery of goods according to the sale agreement, so basically that you are not getting a faulty machine. Regulations vary from country to country, but if something stopped working after 23 months in your example, it is mostly you, who needs to prove that the fault was at the time of purchase.

So this rights cannot really replace the warranty, but maybe someone has more practical experience with how is Apple (as a seller) handling such cases?

 

[za9ra22]

So this rights cannot really replace the warranty...

Right provided by law can indeed replace the warranty. Consumer protections such as the Sale of Goods Act (1979) in England and Wales granted consumers far more wide-ranging rights than product warranties typically did.

 

[leman]

So this rights cannot really replace the warranty, but maybe someone has more practical experience with how is Apple (as a seller) handling such cases?

In all EU countries as well as Switzerland it’s essentially the same as warranty. As long as there is no clear evidence that you have damaged the machine deliberately or accidentally, they will either repair it or replace it complete free of charge. The “proof” is a simple expectation that it should not break within two years from purchase. That’s all.

 

[Weeguy]

Apple is agreeing recommended retail prices with 1st line big retailers - with certain deviations allowed during sales periods...

If it didnt - price wars between retailers would be everywhere, leading to erosion of branding.. Apple would not allow that...

2nd line retailers and further resellers have much less devices on stock so they are seen as margin of error for Apple's P&L.

Price of product is the brand itself and that is why Apple (and other big manufacturers) keeps control of it...

In a nutshell - Apple does allow strong pricing difference of US vs Europe based on:

- US online prices do not contain tax. In Europe its 18-21% and is included in the price.

- US warranty is 1y, while in EU its 2y mandatory - limiting upselling of Apple Care in Europe.

- Finally: SKU management for Europe is more complex than for US. In EU - there is 10+ different keyboard layouts which decreases profitability - as product needs to be market specific. I will never understand why world doesnt switch to QWERTY everywhere - instead France having AZERTY, Germany QWERTZ etc...
US layout is simply the easiest to use...

But then again - Brits are driving on the left side of the road...

Ah, so it’s our fault. Silly me.

 

[deeddawg]

Ah, so it’s our fault. Silly me.

Although @Leon1das outlines a variety of added costs to Apple to sell in the EU, in the end it really does boil down to the fact that Apple will price their products at what enough people are willing to pay that Apple achieves the revenue they wish to achieve.

Thus, the willing (if reluctant) buyers ultimately contribute to maintaining the pricing.

(These are well differentiated non-commodity goods. Cost has (almost) nothing to do with pricing.)

 

[The-Real-Deal82]

Although @Leon1das outlines a variety of added costs to Apple to sell in the EU, in the end it really does boil down to the fact that Apple will price their products at what enough people are willing to pay that Apple achieves the revenue they wish to achieve.

Thus, the willing (if reluctant) buyers ultimately contribute to maintaining the pricing.

(These are well differentiated non-commodity goods. Cost has (almost) nothing to do with pricing.)

I couldn’t give figures on this but I think in Europe people tend to buy the cheaper iPhones and Android is still immensely popular. There’s a lot of Android devices sold in Europe that you can’t get in the US etc too. You’re right, the prices will only be high if people continue to buy them, and it’s down to us not to overpay for things we probably don’t need. I’m certainly glad I resisted buying an iPhone 12PM last time around.