
Ask HN: Why is Apple ripping of European users? 1€ ≠ 1$ - ssn
Anybody can explain this strange policy followed by Apple in their stores?
======
jgrahamc
I don't think it's that strange. Let's compare the cost of the same MacBook
Air in the US and France.

1\. MacBook Air 11-inch : 64GB in US is $999.

2\. MacBook Air 11-inch : 64GB in France is €1,049

3\. $1 = €0.80 at the current time.

So you might think the MacBook Air should be €800 (999 * 0.80). So why it is
€249 more? France levies 19.6% TVA (sales tax) on goods and the tax is
included in the display price; the US levies sales taxes by state and these
are not shown in the displayed prices (sales tax calculated based on
destination).

So, what you need to compare is the pre-tax price on both machine. The pre-tax
price of the MacBook Air in France is €877. Thus Apple is charging €77 more
for the MacBook Air in France than in the US.

The issue is tax rates not Apple.

If you look at the UK you'll find that

4\. MacBook Air 11-inch : 64GB is £849

5\. $1 = £0.65

So, the £ equivalent of the $999 machine is £650. UK VAT (sales tax) is 20%
and thus the pre-tax price of the machine is £707. So Apple is charging £57
more in the UK than in the US.

~~~
toyg
Although not as massive as it looks in the first place, there _is_ still a
discrepancy. The new MBP-Retina top config is 2799 USD -> 1805 GBP. In the UK
store, it's 2299 GBP, less 20% vat -> 1916 GBP.

So they're taking more than a 100 quid extra from each UK customer, "just
because".

~~~
kolinko
Well, don't forget our lovely European regulations. The costs of hiring
employees and handling business in Europe is higher than in US if I'm not
mistaken.

Finally, I'd guess that Apple pays its contractors in USD. So if today 1 USD =
0.8 EUR, Apple needs to consider the fact that tomorrow it may be 1 USD = 0.9
EUR, and the price needs to reflect this scenario as well (they cannot change
the price every single month to reflect the current USD/EUR conversion
ratios).

These are details, but add them together, and you'll arrive at that 10% price
difference (I guess)

~~~
ralfn
The european regulations are cheap compared to the legal risks of operating in
the states. So, thats not it.

Exchange rate? You keep assuming prices are based on costs. They are not. They
are based on profit.

So, when the population in a country has more money to spent, or better but,
there where the median, rather than the average, income is the highest, the
prices will be too.

So, its cheap in the US because americans are generally more poor, except for
a few that throw the average. Off course, "poor" is a very relative concept in
this regard.

Income inequality leads to lower prices, and lower margins.

~~~
wtvanhest
_The european regulations are cheap compared to the legal risks of operating
in the states. So, thats not it._

You would need to provide some evidence of this since it is completely counter
intuitive. Just look at where US treasuries compared with European bonds to
compare which countries/continents are viewed as having less legal risks.

 _Exchange rate? You keep assuming prices are based on costs. They are not.
They are based on profit._

You are correct, if French people will pay more for an Apple product and Apple
can price discriminate, they will.

 _So, when the population in a country has more money to spent, or better but,
there where the median, rather than the average, income is the highest, the
prices will be too._

Well, median income is not the deciding factor for willingness to pay, but
would certainly be a contributing factor. Supply and demand equations could be
more complex or less complex depending on the situation.

 _So, its cheap in the US because americans are generally more poor, except
for a few that throw the average. Off course, "poor" is a very relative
concept in this regard._

This is untrue, proven by the other person's link to wiki.

 _Income inequality leads to lower prices, and lower margins._

This is untrue also. The price of gold watches and private jet flights are not
affected by income inequality, but rather the size of the target segment
(wealthy people). A highly polorized economy with 50% really rich vs 50%
really poor would by far more jet rides than a country with a distribution
toward the center.

~~~
davidw
> Just look at where US treasuries compared with European bonds to compare
> which countries/continents are viewed as having less legal risks.

To be fair, you're comparing apples to oranges. Government bond prices reflect
the default risk of the government in question. 'Legal risks' include things
like getting sued because of perceived defects of your product. Some
statistics about that would be interesting, but probably vary greatly by
sector: medical devices probably involve lots of ass-covering, whereas
something like paper notebooks probably incur fewer lawsuits.

~~~
wtvanhest
_To be fair, you're comparing apples to oranges. Government bond prices
reflect the default risk of the government in question._

They also reflect overall competitiveness of the country in question which by
definition includes legal risks. This is primarily driven from currency
fluctuations. In Europe, the German Bund is currently priced stronger than
Spanish bonds which is due to default risk.

If each country had their own currency (compare US to Europe as a whole), the
bigger fear would not be default risk, it would be inflation risk. This
inflation risk is a function of competitiveness.

 _'Legal risks' include things like getting sued because of perceived defects
of your product. Some statistics about that would be interesting, but probably
vary greatly by sector: medical devices probably involve lots of ass-covering,
whereas something like paper notebooks probably incur fewer lawsuits._

I agree with your assessment of what legal risks are, but keep in mind it is
more to do with the change in legal structures rather than current legal
structure. If there is no change, businesses can make projections and be
confident in them. If there is a risk of change, that is perceived as a larger
legal risk.

I don't have statistics, but I would say that a country (France) which elects
a president that is perceived as socialist (radical change from previous
president) has far more legal risks than the relatively stable US.

~~~
davidw
I think the OP was talking about the costs of lawsuits and their effects on
business, not risk of doing business in general in various places.

Also: I don't think that, in the context of France, the change in presidents
is really all that radical. I suppose I could be proven wrong, but I don't see
them as being that much further apart than, say, GWB and Obama, even if the
latter two are shifted 'rightwards' compared to what the center is in France.

------
virtualritz
In Europe you are forced to give your customer 2 years of warranty on certain
products. E.g. computer hardware or electronics.

Apple refused to in the past (and still had their crazy EUR prices then). But
now, after being dragged to court about it in Italy, and loosing, they at
least have a good reason to charge more in Europe. ;)

This is the case for most vendors. E.g. my Panasonic GH2 camera did cost a bit
more in Europe than it would have in the US. But I get 24 months of warranty.

See:

[http://www.geek.com/articles/apple/apple-increases-
product-w...](http://www.geek.com/articles/apple/apple-increases-product-
warranty-to-2-years-across-europe-2012042/)
<http://www.apple.com/uk/legal/statutory-warranty/>

~~~
waxjar
Apple's warranty policies in Europe are still a disgrace, unfortunately. The
warranty on a laptop charger is only one year, instead of two, for example.
They aren't cheap to replace either (€80 for a simple cable?!). The warranty
on an iPod is useless when there's a crack in the screen: defects that have
nothing to do with the screen will only be fixed for a hefty price. The advice
is to "just buy a new one".

In the mean time, they do reel in this extra money, for apparently no good
reason. It really made me think twice about buying an Apple product again. The
products are exquisite, but the service is just terrible.

The warranty policies in the US however seem to be exquisite as well (or were
a while ago at least).

~~~
icebraining
_The warranty on a laptop charger is only one year, instead of two, for
example._

They might claim that, but it isn't, and a small claims court or equivalent
will prove it to them. All new non-perishable products have two years of
warranty, period.

------
ricardobeat
I feel obliged to repost this. Updated prices in Brazil:

    
    
        Air 11": R$2699 -> R$3699 (1849 USD)
        MBP 13": R$3599 -> R$3999 (2000 USD)
        New MBP: R$9999 (4500 USD - WHAT??)
        New MBP maxed out: R$15973 (~8000 USD...)
    

Import tax is 60% for individuals, around 40%, maybe less for importers. $2199
* 1.4 * 2.06 (today's USD, predicted to go < 1.90) = R$6340. How 2199 turns
into 9999 (4.5x), or 2799 into 16000 (5.71x) is a mystery.

Now, what were you saying about being ripped off?

[edit] just for kicks I maxed out a Mac Pro: R$ 48.959,00, or 1/4 of a nice
brand-new apartment.

~~~
sjwright
How do other brands compare? For example, how much would a similar Dell or
Lenovo laptop cost?

~~~
swah
You pretty much can't buy Lenovo in Brazil (I mean the Thinkpads).

Dell is established, affordable, good customer service. Competes here with
Acer, HP, Toshiba and even cheaper brands probably assembled in Brazil (like
Positivo). Sony Vaios are normally a little bit higher priced, closer to
Apple.

The lower end Dells start around R$ 1700 (820 USD): Core i5, 4GB Ram and 1 TB
HD. The higher end (gaming or slim) ones, my guess would probably be around R$
3500 (1700 USD).

------
wisty
In Australia, it's called "The Australia Tax".

Partly, selling into another country is a bit of a headache. That's one reason
why US businesses can do so well - they only need to succeed in a single
jurisdiction and they'll make a lot of money. Yes, there's different state
laws, but pretty much all countries have annoying state laws, and not all
countries are as lucrative a market as California alone.

~~~
doug363
I get the impression that state laws are significantly more uniform in
Australia than the US... IMHO, it's more that distributors are "used to" a
lower AUD, have exclusivity/best price guarantees, and so can prevent anyone
importing goods (at retail scale) that undercuts them. They've got their
business model worked out on the basis of higher prices, their customers are
used to higher prices, and they make arguments like "hey, well, we ran a bit
of an advertising campaign and submitted your product for regulatory
approval". Perhaps true, but not necessarily worth the extra "tax". See the
story about how the digital price for Australian buyers of The Witcher 2 got
increased because the Australian distributor made a fuss:
[http://www.kotaku.com.au/2011/05/why-does-the-
witcher-2-cost...](http://www.kotaku.com.au/2011/05/why-does-the-
witcher-2-cost-more-in-australia/)

~~~
jeza
There's certainly that factor, but then it even happens with the app store.
Though what I think happened is that the distributors kicked up a fuss when
the iTunes store was made available in Australia, so the record companies made
the prices higher. Apple learnt from this experience that they could make the
prices higher, so they've replicated it across the board. I guess there's also
the possibility that some larger app store developers have been able to
convince Apple to make the price differential higher for Australia as well.

------
pktm
If I had to guess (and I guess I don't /have/ to), I'd say it's strictly
psychological pricing, and is not intended to reflect some sort of idealized
exchange rate or the like.

<http://en.wikipedia.org/wiki/Psychological_pricing>

~~~
AnthonBerg
Agreed.

I think it's not just that though - there's the sales tax and the extra
warranty mentioned elsewhere in thread, plus there's a bit more overhead of
doing business in Europe. More languages, different rules, etc.

Adding all of that up, I can totally understand that Apple just slap on the
same EUR/USD amount and call it a day.

------
bdfh42
Don't forget sales taxes as well. Depending upon where you are you are
probably paying something like 20% VAT (TAV or whatever) - quoted in the
consumer price.

In the USA, they have the annoying habit of excluding sales tax (presumably on
the grounds that it varies wildly from place to place) and that is only added
at the checkout.

------
icegreentea
Just to echo the sentiments here, it's certainly partly just because they can.
If you want a hilarious example, look at Canada. I'm going to use Lenovo here
as an example (but applies equally to other retailers). Baseline T420 on the
US site? $1365.00. Baseline T420 in Canada? $1520.00. The exchange rate? Been
within 5% of parity (either direction) for the last several years. Taxes?
Canadian sale prices must be shown pre-tax (just like in the US). Supply
chain? Practically the same thing. I ordered a T400 several years ago, and
watched it get shipped from China to Alaska to their depot in Kentucky, and
then trucked up to Toronto.

I guess there might be some problems with the Made in China part (doesn't
completely fall under NAFTA), but I honestly can't figure out the tarrif
/import duty laws.

But the point is that US prices almost always seem lower =/

~~~
jakeonthemove
IT IS lower! I've been buying stuff from the US for years now - even
accounting for VAT, certain IT products are cheaper, not to mention there are
a lot of products you can only find in the US or online...

------
sgift
To make it short: Because they can. As others have pointed out there are
taxes, regulations and so on, but the main reason (in my opinion) is that they
still make a very good profit in Europe, so why should they reduce prices?
Apple is a business and businesses will do almost anything to make more profit
(that's the reason they exist, nothing wrong here).

p.s.: Steam has a similar policy and one could note that Steam and Apple share
a common trait: No real alternative.

~~~
Kudos
That is not a Steam policy, that is a policy of publishers who distribute via
Steam.

If you look at Valve's own game pricing, you will see the euro and dollar are
almost on parity when you account for sales tax.

~~~
sgift
If I remember correctly you could buy with dollars at Steam as an European
customer until one year ago, since then this isn't possible anymore. Was this
change forced by the publishers?

Anyway, thanks for the hint. Pricing of Valve games is indeed near parity, so
you are probably correct regarding publishers/Steam.

------
Nomon
The new retina display MBP US starting price 2199$ == 1757€. The new retina
display MBP FI starting price 2349€ == 2938$

Difference of 739$ or 590€ feels quite substantial.

------
greyman
It's because of two years warranty, higher taxes, toll, and for more expensive
items, smaller number of sold items.

It's not fair you singled-out Apple, since this is true for several gadgets I
bought, software, or for example more expensive Canon lenses. It's not Apple
specific thing.

~~~
Terretta
My friend from the UK comes to the US to buy sports cars. His wife comes with
him to buy clothes. While here, they also pick up iPhones. Not see what makes
this a particularly Apple issue.

------
patio11
Europe is ripping off Apple customers, for values of "ripping off" which mean
"more or less listening to their expressed preferences that certain favored
goods cost nothing at the margin and everything else costs a lot more."

------
mlitwiniuk
Summing it up - EU prices have VAT included and exchange rate is best possible
for Apple in long term perspective. But correct me if I'm wrong - if you buy
Macbook in Apple store in US their adding some kind of local tax, right?

Also - if you're running a company in EU you can refund overpaid VAT, right?
So the only difference is, that currency exchange rate is worst possible.

------
auberonx
The first post by jgrahamc sums it all up nicely. On the additional 77 EUR
Apple charges in Europe, one may have to consider strikter recycling laws. As
far as I know, the cost of recycling is already charged at the time of
purchase of an electronic product in Europe. That may, at least in part,
explain the 77 EUR margin.

------
jwildeboer
In Europe Apple _must_ give 2 years of warranty. There was a recent court
decision on that in Italy. That is additional cost that reflects also in the
price.

~~~
Argorak
The court decision was about Apple not mentioning this in the prospectus of
their support plans. They always followed the two years warranty rule.

<http://www.theregister.co.uk/2012/03/23/apple_italy/>

------
Semaphor
Have you looked at the prices for the Aeron Chair? Amazon.com: around $700
Amazon.de: the cheapest offer is 1.298,99€ (that's around 1,624.16)

That's some markup there…

------
jakeonthemove
Yeah, pretty much _because they can_. The average buyer doesn't compare USD to
EURO - they just see the price in EURO and it seems normal. Keep in mind that
the salaries are also similar in both countries USD=EURO (so technically US
workers are paid less if you convert).

Running a company in the EU is also harder than the US, at least for smaller
businesses and startups - that may account for something...

~~~
mjwalshe
Not in the UK from it tech and engineeing jobs our pay is much lower compared
to SV and housing costs a lot more. The only advatage we have is only paying
12% for NHS etc instead of 20%+ just for health insurance.

~~~
jakeonthemove
I was talking more about the mainland - Germany, Netherlands and Belgium to be
more specific... But you can't really compare anything with the Silicon Valley
directly - IT and engineering jobs are present all over the US, and they pay
less than SV companies and startups, too...

~~~
mjwalshe
well going from UK to Europe "Engineers" are MUCH MUCH Higher status jobs.

The wife of the Number 2 at BT labs (you know the place that desigend and
built Colossus) once got asked what sort of cars her husband worked on :-(

And yes they did think he was a car mechanic.

------
cientifico
Because they can!

The good price is the maximum price the client will pay for the
service/product.

As long as the users buy, they are going to continue this way.

~~~
gm
I support this argument. Not sure why the downvotes, but it's the most
truthful answer in this set of comments.

Cheers to you sir, just because people don't like the truth does not make it
any less truthful.

------
phamilton
Why is McDonalds ripping off European customers? In my somewhat limited
experience (3 years in Belgium and 2 in Sweden), the only good that has
anything to do with the exchange rate is the dollar itself. For everything
else, $1 ~= 1 euro ~= 10 SEK ~= 1 pound. Look at the cost of a cheese burger
at McDonalds.

------
ksec
Apart from Tax, there is also the problem with fluctuation of exchange rate.
Then there are operating cost and other sorts of things.

There is still quite a margin, but same type of Electronics devices would have
cost more in UK compare to US even without the tax difference. So it is not
really a Apple thing at all.

------
clneagu
It's simpler than that. They do it because they can.

Apple could charge allot less for everything they sell but they don't just
because they can get away with it.

I'm sure nobody here really believes that the difference in price between
countries has anything to do with keeping the profit margin the same
everywhere :)

~~~
nodata
If the difference was high enough, people would import.

~~~
jakeonthemove
Most people don't want to deal with the extra waiting time and warranty issues
to save $100-200, though...

------
mkup
It's not Apple ripping off users, it's a price of state-sponsored healthcare
and education. There is no such thing as a free lunch.

~~~
rmc
I cannot see how governments spending money on education and hospitals means
that Apple prices are higher?!

 _(Unless you're talking about higher sales tax/VAT?)_

~~~
mkup
Yes, it's exactly what I'm saying: retail prices in Europe include VAT and
it's about 20-25%, same as difference between the value of one dollar and one
euro. And, in general, taxes are higher in Europe because of higher government
spendings.

------
swah
Will folks that like to use external monitors buy the MBP Retina?

