Software Price Gap Between the US and Europe 1003
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?"
Thats funny ... (Score:1, Informative)
I Heard you can get it from P2P for the same price world wide ... I don't know where you get YOUR sources.
Sales tax alone doesn't make up for it (Score:3, Informative)
Probably won't make up for all of the difference, but I expect that the US prices don't include sales taxes etc...
Value added tax, the EU counterpart to sales tax, definitely doesn't make up for all of it. As I write this, Google says [google.com] the euro is 57 percent higher than the dollar, but a typical VAT in Europe is about 20 percent. Or have European governments enacted Brazil-style prohibitive tariffs on imports of copies of proprietary software?
Re:Because they can (Score:3, Informative)
The catch? (Score:5, Informative)
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...
In Canada, too. (Score:5, Informative)
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.
Re:Taxes, for one thing. (Score:3, Informative)
And when had the Euro not been <= to the Dollar? if you look at this graph from the past 5 years [yahoo.com], they have never met.
Re:Abyssal = abysmal? (Score:3, Informative)
The usage is, oddly enough for Slashdot, correct, though uncommon. Abyssal, in addition to meaning abyss-like, means unfathomable. Plus it raises the image of an abyss, which is rather appropriate, given the discussion. On the other hand, abysmal is much less appropriate because that simply describes the situation as being bad, rather than emphasizing the vast difference in price.
Re:Real question: Why can they? (Score:5, Informative)
That's simply not true.
There are thousands of Windows distributors in the US. Though MS might be the final arbiter of who gets to distribute MS products, they rely on widespread distribution networks to provide the constant revenue stream they need to stay in business.
With foreign sole distributorships, the only stipulation is that the distributorships provide a certain level of sales and income back to MS (for example). So within the country, the sole distributor sells the product for at least cost, then adds in his cut, then pumps the price up because he has no competition to drive his prices down.
Since the sole distributor acts as a monopoly within the country, the retail outlets have to bear the cost that the distributor charges, and the customers have to bear the costs passed down from the retail outlets.
Yes, it's capitalism, and it's grounded in well understood economics. But it isn't "Supply and Demand at work" in a free market sense.
Re:Taxes, for one thing. (Score:3, Informative)
A bit more than 5 years ago, and not for long.
Re:You answered your own question (Score:4, Informative)
very little software gets localised for proper english - we nearly always are given the american version.
Re:Real question: Why can they? (Score:3, Informative)
The term "first world" refers to countries that are capitalist, which are technologically advanced, and whose citizens have a high standard of living.
The terms "First World", "Second World" and "Third World" have precise political and economical definitions going back to the Cold World era. This definition of yours doesn't match any. This is not to mention that "First World", "Second World" and "Third World" have fallen off of favor due to the changes that have taken place since the fall of the Soviet Union.
Not only is the adjective you are trying to use antiquated, but the meaning you are attaching to it is not in tune to the way it's been historically been used.
Re:Because they can (Score:2, Informative)
Re:Not only software... (Score:3, Informative)
To be fair...the thing that does piss me off is that companies will have this price difference and then when "damages" gets mentioned they inflate the number. So MS is selling Windows in China for $3 a copy, but I seriously doubt they consider every pirated copy of Windows in China a $3 loss, they probably figure it even higher than the US retail cost.
Import duties are another cost (Score:5, Informative)
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.
Re:Real question: Why can they? (Score:3, Informative)
A First World country is one that supports capitalism and the western world against the Soviet Union and its allies. So yeah, we're a semi-First World country now, since there's no Soviet Union to oppose.
Re:Real question: Why can they? (Score:3, Informative)
Again tax figures taken from wikipedia, so I expect that there are things I'm missing.
By comparison someone earning £20,196.51 ($40k) in the UK can expect to pay 3575.30 income tax (20% of (gross - tax free allowance)), + health insurance tax of (gross-(tax allowance*weeks))*rate = (20,196.51-4264)*.11 = £1752.58. Added together gives a total of £5327.88 which is 26.38%.
Hardly a massive difference there between the 2 countries is there. Now consider that the NHS is free in the UK, whereas anything health related in the US requires health insurance.
Btw, I'm not from the UK, but I'm seriously envious of their health system!
Re:Nothing New (Score:4, Informative)
I was talking to a former Sun employee the other day and he explained to me one of the stresses of his former job.
The manufactured an external drive which worked with most systems just fine, but on some required an extra piece (I want to say a termininator). In Europe due to environmental legislation there was a requirement that useless or unneeded pieces can be returned to the manufacturer to prevent them from simply throwing them away. That would have been a logistical nightmare so they simply made up another version that came with it, and one that didn't.
In the end this mean they had three different product codes for almost identical boxes all of which had to be manufactured and kept in stock, one for Europe with, one for Europe without, and one for everywhere else. Tell me that doesn't add some overhead cost?
Re:Nothing New (Score:5, Informative)
Until you have to declare it while going through Customs...
It's still a lot cheaper. In fact, if you get a good deal on flights and are buying, say, a few thousand dollars worth of "stuff", it can end up cheaper to fly from here in Switzerland (or the UK, as I have friends there who do the same thing) to the US and shop there.
Import duties for most things in Switzerland is less than 10% - that's assuming you even get checked at customs.
Of course, then you'll see the real difference - spending the U.S. price plus tax, instead of the localized price plus tax. (What, you thought they included tax in the listed price?)
To give an example, a 16G iPod touch here in ZUrich costs CHF 580.-, which is about UDS560. A 16G iPod touch on apple.com is USD400. Decent clothes are (relatively speaking) cheaper still (and will come in reasonable sizes).
Another example is pushbikes, which for some reason they are crazily expensive in Switzerland. I know several people here who have saved well over CHF500.- by importing a bike from the US completely above boardand paying the full customs charges and duties.
Stuff in America is just cheap. This covers everything from consumer goods to services (10 minute taxi ride here can easily set you back USD40+ - it's about USD7 just in flagfall).
It's going to get even more dramatic over the next 1-2 years as the US$ continues to tank.
Re:Real question: Why can they? (Score:5, Informative)
Probably the same as they'll feel when they learn it was misattributed [wikiquote.org] to Voltaire, and was actually coined by an English-woman!
She wrote the phrase, which is often mis-attributed to Voltaire, "I disapprove of what you say, but I will defend to the death your right to say it," as an illustration of Voltaire's beliefs. [wikipedia.org]
Re:Because they can (Score:3, Informative)
I think it also has to do with the fact that we pay much more for electronics than you in the States because we have at least a one-year warranty on all consumer goods we buy here in Europe. That has to be paid by the customer of course, so we are already used to paying high prices. Of course on software there are no warranty costs to speak of, so it's easy money for the software houses.
I order almost all the games I play in the States. They cost about half the price in dollars what they cost here in Euros, and since the dollar is so low, even with import tax and whatnot it's still cheaper to get them from the other side of the big pond than buy them here. They are here pretty quick too: the fastest delivery time I had was 4 days!. Until now I've been lucky; I didn't have to pay taxes once. I read somewhere that 90% of the small packages that go to Europe from the States are not checked.
Re:Because they can (Score:3, Informative)
Here is a link to remember http://liberty.hypermart.net/voices/2003/Actual_Cost_Of_Making_These_Popular_Prescription_Drugs.htm [hypermart.net]. So while some Europeans are paying more for software they a paying a damn sight less for prescription drugs and for example in Australia no prescription cost me more than twenty odd dollars (and the Australia government gets major discounts via negotiations prior to any drug being list.) so the final price in Australia is because of the government 'er' screwing corporations in favour of citizens, hmm, taxes well paid ;).