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Software The Almighty Buck United States

Software Price Gap Between the US and Europe 1003

Posted by timothy
from the we'll-trade-cheap-software-for-cheaper-cheese dept.
Kensai7 writes "A quick comparison between same versions of mainstream software sold in the USA and the EU markets show a big difference in the respective price tags. If you want to buy online, let's say, Adobe's Dreamweaver CS3, you'll have to pay $399 if you live in the States, but a whopping E570 (almost $900 in current exchange rates!) if you happen to buy it in Germany. Same story for Microsoft's newest products: Expression Web 2 in America costs only $299 new, but try that in Italy and they will probably ask you no less than E366 ($576!). How can such an abyssal difference be explained? I understand there are some added costs for the localized translated versions, but I also thought the Euro was supposed to be outbuying the dollar. Where's the catch?"
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Software Price Gap Between the US and Europe

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  • Because they can (Score:5, Insightful)

    by Shadow of Eternity (795165) on Tuesday July 29, 2008 @08:11AM (#24383461)

    There's no complicated reason, companies charge more for products in europe because they can.

    • by Anonymous Coward on Tuesday July 29, 2008 @08:21AM (#24383621)

      Obligatory:

      "I'm proud to be an American, where at least my software is more free"

      • by Anonymous Coward on Tuesday July 29, 2008 @08:41AM (#24384005)

        "I'm proud to be an American, where at least my software is pirated"

        Fixed. :)

      • Nothing New (Score:5, Funny)

        by fictionpuss (1136565) on Tuesday July 29, 2008 @08:53AM (#24384191)

        Microsoft has always charged less in developing nations with weak or fragile economies.

      • by mgblst (80109) on Tuesday July 29, 2008 @09:34AM (#24384975) Homepage

        Yes, but if you are stealing it, you get a better deal in Europe, where you end up saving more.

    • by BadAnalogyGuy (945258) <BadAnalogyGuy@gmail.com> on Tuesday July 29, 2008 @08:21AM (#24383637)

      The reason is that the companies create artificial monopolies by creating sole distributorships in each country. On top of that, name/brand recognition goes a long way in semi-First World countries like those in Europe, so something like DreamWeaver is going to gather a lot more interest than XMLSpy (or what have you). So you have a market focused on one product, and only one supplier of that product. The math is pretty simple; consumers lose out to asymmetric market forces.

      It's not just "because they can", but it's actually the market that has created those conditions. If Europeans would wake up to the alternatives (like China and India have), software prices would be much more reasonable.

      • Re: (Score:3, Insightful)

        by MrMonroe (1194387)
        The poster above already nailed you, but I'd love to know what the "alternatives" that India and China have "woken up to" are. I assume you mean people buying one copy of the software, cracking it and distributing it on omnibus DVDs for $5 a pop out of a suitcase?
      • by zeromorph (1009305) on Tuesday July 29, 2008 @08:51AM (#24384157)
        Summary:

        ...if you happen to buy it in Germany

        You:

        ...in semi-First World countries like those in Europe

        Wow!

        But then, you are right, when I was living there the first 25 years of my life, we used to sit on trees and hunt mammoths with hand-axes, while our neighbours were struggling with the fancy new walking-upright industrial norm.

      • by MagdJTK (1275470) on Tuesday July 29, 2008 @08:58AM (#24384291)
        Semi-first world countries? Just goes to show how out of touch Americans really are with the rest of the world.
        • by brkello (642429) on Tuesday July 29, 2008 @09:36AM (#24385013)
          Your post is just as stupid...you take some idiots post on Slashdot and apply it to all Americans.
      • by ClaraBow (212734) on Tuesday July 29, 2008 @09:03AM (#24384357)

        semi-First World countries

        I would argue that the United States has become a semi-First World country. We have lost our manufacturing base, our strong middle class is rapidly diminishing and the gap between the poor and rich is widening.

    • Re: (Score:3, Informative)

      by maclizard (1029814)
      I agree that there is no complicated reason, but there is reason more than 'because they can'. Example: Italy doesn't want money leaving there economy, so they tax such imports heavily to offset the economic loss. On the other side, US software companies know the game and charge more yet because there aren't many alternatives, thus driving taxes even higher.
    • Re:Because they can (Score:4, Interesting)

      by NetDanzr (619387) on Tuesday July 29, 2008 @08:26AM (#24383761)
      Spot on. I work for a technology company that sells both hardware and software in the US and Europe, and our European prices are nearly 80% higher than our US prices, which means that even at absolute values our equipment costs more Euros than Dollars. Why do we price our products so high? Because we can. We found that Europeans are much less price sensitive and much more willing to be early adopters; in the US our customers know what features they need and are unwilling to pay for anything extra we throw into the mix. You could almost say that in Europe people purchase new technology for the sake of technology, while in the US people view technology as mere work tools.
      • by houghi (78078) on Tuesday July 29, 2008 @08:35AM (#24383893)

        You could almost say that in Europe people purchase new technology for the sake of technology, while in the US people view technology as mere work tools.

        So you are saying that the newn things you implement are useless?
        One could also say that Europe sees the advantage earlier while Americans stick with what they have for better or for worse.

    • Yes and No (Score:5, Interesting)

      by theolein (316044) on Tuesday July 29, 2008 @08:30AM (#24383817) Journal

      I think that the real reason is because they can, and we dumbass fuckers are (somewhat) prepared to pay for it (piracy is higher here than in the US).

      I have personally written to Adobe complaining about the massive price differences, and Adobe wrote back claiming it was because of localisation costs (translating software plus documentation into 20 languages can be pricey).

      BUT, the bastards are lying. The localisation of any piece of major software is now a matter of course. It's planned in right from the very beginning.

      To the wankers from Adobe reading this forum, I think it's about time the EU took a look at this practice.

      • Re:Yes and No (Score:5, Interesting)

        by grahamsz (150076) on Tuesday July 29, 2008 @08:35AM (#24383899) Homepage Journal

        Still, new products usually appear in English first and if there's demand for them; the localized versions appear later.

        I expect the UK gets shafted because they seem to spread the cost of creating the "Euro Version" across all countries; even though it's practically a no-op to convert from US to UK english.

        Support also adds to it. Most large software companies have UK support staff, and that adds to the cost.

        Taxes add a little more. The UK has 17.5% VAT built into the price; if you have to pay sales tax in the US then it's added at checkout.

        But mostly I think it's because they can and because the market bears it

        • Re: (Score:3, Interesting)

          by Swizec (978239)

          Still, new products usually appear in English first and if there's demand for them; the localized versions appear later.

          In Europe everyone speaks English and almost nobody uses localised versions of products, if for nothing else than that they've gotten used to the english version before localisations come out.

        • Re: (Score:3, Insightful)

          by AmiMoJo (196126)

          I'm really fed up of the VAT argument. Yes, it's higher, but with other taxes and costs is levels out anyway. Plus, 10-12% more tax does not mean you get to charge 100% more for your product.

          It's out own fault for tolerating it. I don't know about the rest of Europe, but they call Britain "Treasure Island". There has been a blacklash in recent years, but not a very effective one, and in the process we seem to have forgotten the value of quality.

    • Re:Because they can (Score:5, Interesting)

      by Bombula (670389) on Tuesday July 29, 2008 @08:46AM (#24384081)

      A fair price is "whatever the market will bear."

      This is an interesting example of just how borked econometrics get by social factors: There is no conceivable quantitative economic mechanism by which the European market demand would justify a price 3 times higher than the North American market. That only leaves qualitative/fuzzy social factors as the explanation. And that, of course, throws any quantitative analysis of the market using econometrics right out the window.

      Software may be exceptional because it is unique as a product in that it has close to zero variable costs (ie: same cost to make one copy as 1 billion copies). But personally, I don't buy this. I think most markets are similarly borked by social factors - everything from the price of movies to the price of shoes to the price of legal services. The price really is 'whatever the market will bear', but what the market will bear has very little to do with the actual costs of production in any industry.

      Now think about what this means: if prices correlate poorly (or not at all) to costs, that means the industry in question is not competitive. If there were legitimate competition, there would be perpetual downward pressure on prices and everything would be priced just a little more than it costs to produce. Now think what else this means: any industry with profitable prices (ie high margins) cannot be genuinely competitive. One of the defining characteristics of a free market is that consumers are not coerced by force or fraud, where a lack of competition constitutes coercion (think of a monopoly jacking up prices because it has no competitors...).

      Gasp! Horror! Profitable markets =/= free markets!

      Where is your Economic God now?

    • Re:Because they can (Score:4, Interesting)

      by Mattsson (105422) on Tuesday July 29, 2008 @10:25AM (#24386039) Homepage Journal

      Did he take into account that European prices usually include taxes that are sometimes excluded in the list price in the US, one wonder?
      Also, I assume that most countries have import-taxes on software too...

  • by k33l0r (808028) on Tuesday July 29, 2008 @08:12AM (#24383477) Homepage Journal

    Probably won't make up for all of the difference, but I expect that the US prices don't include sales taxes etc...

  • by awitod (453754) on Tuesday July 29, 2008 @08:13AM (#24383493)

    The cost of localizing everything is not inconsequential. You can't just run it through a translator and go and you still have to do acceptance testing on the localized version. The number of German or Itallian consumers is small compared to those who use English and the price reflects the marginal production costs per unit.

    • by Kiffer (206134) on Tuesday July 29, 2008 @08:18AM (#24383575)

      I see... so why does it still cost stupid prices in Ireland and the UK where little or no localisation needs to be carried out?

      • by Muad'Dave (255648) on Tuesday July 29, 2008 @08:29AM (#24383803) Homepage

        ... little or no localisation needs to be carried out?

        There is some, at least. In the US, that would be localization.

        • by SkunkPussy (85271) on Tuesday July 29, 2008 @08:59AM (#24384313) Journal

          very little software gets localised for proper english - we nearly always are given the american version.

        • by robot_love (1089921) on Tuesday July 29, 2008 @09:00AM (#24384321)

          The parent post is modded funny, but it should definitely be informative instead. As a Canadian writing heavily regulated documents in the UK, I have been continually amazed at not only how many small differences there are between US and UK English (I find and replace all 'z's as a starter) but how much the English care. We have had applications rejected for being too "American". The culprit? Spelling!

          Converting from US to UK English is a non-trivial task, and one of more subtlety that most would give it credit. I am by no means justifying the price gouging, but there is some work involved to make it happen.

          As an aside, it doesn't help that the car-wreck that is Word does not pick up on many American words that have UK counterparts. I currently have 30+ in a special dictionary that are always marked as mis-spelled (whether the document is formatted UK or US English). Those words always got me into trouble because they looked right to me!

        • Re: (Score:3, Interesting)

          by asc99c (938635)

          I object to paying for localisation when my spell checker on Word would still complain about the word localisation no matter how many times I select the British English dictionary!

        • by Roger W Moore (538166) on Tuesday July 29, 2008 @11:43AM (#24387595) Journal
          It is localization in the UK as well. The preferred ending according to the OED is -ize although -ise is acceptable and seems to be very common in modern usage. An Inspector Morse episode once hinged on the fact that en English professor would not write a suicide note using -ise because -ize is the more correctending. This is why I always get really irritated with spell checkers: the UK versions refuse to accept -ize as valid.
    • The number of German or Itallian consumers is small compared to those who use English and the price reflects the marginal production costs per unit.

      Those costs are still a tiny fraction of the actual development costs...

    • Re: (Score:3, Insightful)

      by Ed Avis (5917)

      and the price reflects the marginal production costs per unit.

      So it's free of charge then?

      The marginal production costs per unit are almost zero. All they have to do is burn a CD and post it to you. Usually you don't even get a paper manual. There are some costs for support, I admit.

      Production costs for software are almost entirely fixed costs, and once paid you can ship one copy or a million copies of the program for pretty much the same cost.

  • markets (Score:5, Interesting)

    by Red Flayer (890720) on Tuesday July 29, 2008 @08:15AM (#24383527) Journal

    How can such an abyssal difference be explained?

    Very easily. The US and Europe are different markets. Analytics for pricing have shown time and again that Europeans and Britons are willing to pay more for consumer electronics and for software. Hence, suppliers charge more.

    As time goes on and the "global" market homogenizes, this will change. But until then, pricing decisions based upon local markets will continue to create situations like those described in the summary.

    As for the reasons that Europeans are willing to pay more, any input I'd have would be speculation. The fact that the development of most commercial software happened in the US (historically, not necessarily presently) probably has something to do with it.

  • Not only software... (Score:5, Interesting)

    by Fackamato (913248) on Tuesday July 29, 2008 @08:17AM (#24383551)
    For example, the game Rock Band for Xbox 360. It costs USD 150 (~ euro 95) in USA (on Amazon.com) and SEK 1990 in Sweden (euro 211 or USD 332). It's more than double the price!!! Did we get anything extra? NO! Oh yes, sorry, we had to WAIT more than 6 _months_ for a European release, which didn't bring anything new/better compared to the American version. FU EA!
    • Re: (Score:3, Insightful)

      by shashark (836922)

      In Malaysia - it costed me 300 RM - or - 100 USD. Funny ? explaination below

      [ ] Market Dynamics Blah Blah
      [ ] Supply Demand & Blah Blah
      [ ] Blah Blah Capitalism
      [x] You price your product based on what people can pay. Rest, is Bullshit.

      • Re: (Score:3, Informative)

        by db32 (862117)
        Actually...pricing your product based on what people will pay IS the Supply Demand & Blah Blah piece. I am terribly amused when people come out crying about these price differences. The fact is...an item will be priced to maximize revenue. Very simple economics. You have consumers * price = revenue. You increase the price and consumer goes down, you lower the price and consumers goes up, this ultimately is a very simple mathmatical problem of maximization and it blows my mind that so many "geeks" a
  • sheesh (Score:5, Funny)

    by ionix5891 (1228718) on Tuesday July 29, 2008 @08:18AM (#24383565)

    were not that dumb

    http://thepiratebay.org/ [thepiratebay.org]

    • Re:sheesh (Score:5, Insightful)

      by cliffski (65094) on Tuesday July 29, 2008 @08:25AM (#24383737) Homepage

      you realise all the stuff on there is only made because they rely on honest people buying copies right?

      You might think its cool to just leech off of honest people, but some of us would have a real problem with that.

      or did you think pixies from outer space made all the software?

  • Conversions (Score:5, Funny)

    by edittard (805475) on Tuesday July 29, 2008 @08:19AM (#24383589)

    E570 is not $900; it's stearic acid. E366 is potassium fumarate.

  • by vengeful (734172) on Tuesday July 29, 2008 @08:22AM (#24383667)
    Because Free Software is more popular in Europe, the commercial software companies must make up for the lost stales by increasing prices.
    If those damn users would only stop using Free Software, the price of commercial software could come down to a more reasonable level.
  • The catch? (Score:5, Informative)

    by johannesg (664142) on Tuesday July 29, 2008 @08:25AM (#24383749)

    Simple. They can get away with it.

    Sure, the US price probably doesn't include VAT while the European price does. So let's take those 20% (roughly) of the European prices: that will be $720 for Dreamweaver (1.8 times US cost), and $460 for Expression Web 2 (1.5 times US cost). And I've checked with a local retailer; those are prices for non-localized versions, so that excuse does not apply.

    The catch is that we are being ripped off, plain and simple.

    Incidentally, the same is true for books. Books are ridiculously overpriced here, and for scientific or technical books it is _always_ _much_ cheaper to order them from Amazon than to buy them from a local bookstore. Even including transportation cost, the difference can be well over a factor two!

    The silver lining is of course, that Amazon sells software as well...

  • Welcome to economics (Score:5, Interesting)

    by jwiegley (520444) on Tuesday July 29, 2008 @08:27AM (#24383775)

    Same items in different countries do not cost the same amount when taking into account only the exchange rates.

    There are several reasons for this. A couple that are easy to explain are:

    1. The price of a good is what the market will bear. If the people are willing to pay more in the UK then you can expect the price to be more in the UK. (And as an American living in Britain for the past month... man can I tell you the Brits are willing to bend over and take it.)
    2. The prices of products are affected by taxes. The prices you quote for the UK have something like a 17% "Value added tax" reflected in the price. The US prices you quote do not reflect possible sales tax which can be as high as 9.4%. While those two don't account for the entire price difference for Dreamweaver there are other corporate taxes and trade tariffs that remain unaccounted for.

    Do you think national healthcare is free?? Where do you think these countries get the money for that and other social[ist] programs? They tax the hell out of companies, imports (and individuals)

    Don't worry. With the current US economy suffering from too much spending, already high corporate taxes, soon to be way higher taxes, mismanaged and over-promised social[ist] programs, a falling dollar and interest rates designed to trick people into thinking everything is ok while causing inflation to skyrocket it won't be long before the prices you mention even out for us. Maybe even compared to Zimbabwe.

  • In Canada, too. (Score:5, Informative)

    by Pig Hogger (10379) <pig.hogger@g[ ]l.com ['mai' in gap]> on Tuesday July 29, 2008 @08:27AM (#24383777) Journal

    It's the same thing with Canada; identical products will cost 10% to 25% more, and in some cases, like automobiles, manufacturers will go to extreme lenghts to insure that canadians cannot buy stuff in the US and import it themselves.

    And no, in Canada too, prices are quoted without taxes.

  • by Joker1980 (891225) on Tuesday July 29, 2008 @08:38AM (#24383943)

    In the last 5 to 10 years the conversion has usually gone something like:

    $1 = £1 = 1 Euro
    Nice and simple just the way they like it.

  • by ErichTheRed (39327) on Tuesday July 29, 2008 @08:40AM (#24383975)

    Having worked for European companies in the States, I think it's a "business culture" thing. Europeans tend not to be as price-conscious when making business related purchases. US companies will fight until the bitter end negotiating over a few dollars, so software companies know they have to price competitively.

    Not quite sure what drives it though; Europeans can be tough negotiators on most contracted services.

    Take an example from my line of work -- air transport. Business class tickets sell very well in Europe, mainly because it's considered a perk once you get to a certain level. With the exception of consulting companies and others that can bill away expenses, most staffers and lower managers in the US ride in coach. Business and first are reserved for senior management, and even that requires justification when times get bad. If you're a road-warrior staff member, and fly legacy carriers, you'll eventually get to a point where (through FF miles) you're upgraded to business, but I've never worked for a company that would pay the extra money for a business class ticket, even on 17-hour torture flights!

    Maybe there's some parallels to software too.

  • Hassle factor (Score:5, Insightful)

    by Spazmania (174582) on Tuesday July 29, 2008 @08:40AM (#24383981) Homepage

    The governments of Europe hassle companies (in general) more than the US does. This hassle has a cost. The cost is reflected in the price.

    Let me put it another way: Adobe considers it worth their while to sell Dreamweaver at $400 in the US. After all the hassle, they consider it worth their while to sell Dreamweaver for $900 in Europe. At $400, would it be worth their while to sell Dreamweaver in the EU at all? Maybe not.

    Let me put it a third way: go on eBay and you find that a lot of US sellers won't ship outside of the US and Canada. Why not? Because it isn't worth the hassle. Would it be worth the hassle if the seller could check a box which said, "double price outside North America?" Maybe so.

  • Single data point (Score:5, Insightful)

    by iaamoac (206206) on Tuesday July 29, 2008 @08:41AM (#24384011)

    Don't get your knickers in a bunch just yet over the price difference. What we have here amounts to a single data point in time.

    Perhaps a better question to ask first is "How has the price of software in Euros changed over the last couple of years?"

    Why ask this? You are converting prices back to US dollars. The value of the US dollar as compared to Euros has been declining for the last couple of years.

    IF the price has been relatively steady (I don't know if this is the case), and people are comfortable paying this price, there is less incentive for US companies to lower the price of their software in Europe. If the Euros are converted into US dollars, they would be keeping more $$$. It's their software, they can charge what they choose.

    This only addresses part of your question. Since one US dollar has been worth less than one Euro (at least for the last five years), the price at any point in that period (assuming a relatively constant Euro price of software), would still be higher.

    There is probably some holes in my reasoning, but I am sure smarter souls will be more than happy to correct me.

  • This just in (Score:3, Interesting)

    by The Cisco Kid (31490) on Tuesday July 29, 2008 @08:50AM (#24384137)

    This just in - FreeBSD, Fedora, Ubuntu, etc, as well as OpenOffice, Gimp, Firefox, etc, are equally free *regardless* of what country you live in.

    What is this 'buying software' concept you speak of?

  • by jmichaelg (148257) on Tuesday July 29, 2008 @09:49AM (#24385253) Journal

    Back in the 90's when I was shipping software to Europe, the price I'd charge the wholesaler was the same I'd charge local wholesalers. Getting through customs however, wasn't trivial. Import duties in the 90's which were separate from VAT were running around 15-20%. The wholesaler paid that on top of the price he paid us and added his markup which he passed on to the retailer. The retailer turned around and added his markup to the price he paid which included the duty cost plus the wholesaler's markup on the duty cost. By the time it got to the customer, the customer was paying markup on markup on duty plus regular retail-wholesale markups. What initially appeared to be a relatively small duty cost mushroomed into a sizable burden.

    I was talking to one of the wholesalers about it and he laughed it off by saying 'yeah, but we get trains!' He'd then piss and moan about his more savy customers buying directly from retailers in the states and avoiding the double markups. That of course, reduced his market which meant he raised his prices more to cover his fixed costs.

    Another factor driving prices in Europe was the fact that we'd sign exclusive distribution agreements so a wholesaler owned the market for a specific country. We did that because the wholesaler handled the translation and marketing costs in the specific country (we were a small company). Since he was the only source for a product, there wasn't any price competition. Here in the states, we'd wholesale with 5-6 distributors and those 5-6 companies were cut-throat with each other. The ones who couldn't compete on price, didn't survive.

     

  • Nothing new here (Score:5, Insightful)

    by metamatic (202216) on Tuesday July 29, 2008 @09:51AM (#24385291) Homepage Journal

    Back in the 90s on Usenet I used to tabulate and compare prices between MacWarehouse's UK and US catalogs. I'd subtract the VAT to ensure the comparison was fair. The result showed markups of 50-100% on a regular basis.

    In most cases, any localization done was incomplete. For example, ClarisWorks still referred to "color".

    As I recall, the #1 winner was Dave Winer's Userland Software. Their Frontier product had something like a 200% markup in the UK, and zero localization performed.

    I actually contacted some of the winners about their UK pricing. One company told me that the markup was because a small number of distributors controlled the UK software market, and those distributors were the ones setting the prices.

    It's worth noting one of the side effects of this practice: my experience in the 90s was that everyone ran the US version of Mac OS and ordered their software from the US in order to save money. This indirectly killed the market for Mac software in the UK.

    Also, the BSA used to estimate software piracy by comparing the number of people running (say) Microsoft Word with the number of UK sales of Microsoft Word. So the gray market meant that US piracy stats were depressed, and UK piracy stats were artificially inflated.

    (I was going to link to some of my 1992 Usenet posts, but Google Groups doesn't seem to have them.)

  • On the bright side (Score:4, Insightful)

    by Bullfish (858648) on Tuesday July 29, 2008 @10:21AM (#24385951)
    the disparities have fueled a growth in open source software and their alternatives. And, as a result, some very good alternatives have come out of Europe. Enough that some companies like MS have set up lobbying efforts there to try to stop governments and businesses from adopting the alternatives (why would they cut the price, it's not their "way").

Real Users find the one combination of bizarre input values that shuts down the system for days.

Working...