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?"
Because they can (Score:5, Insightful)
There's no complicated reason, companies charge more for products in europe because they can.
Taxes, for one thing. (Score:4, Insightful)
Probably won't make up for all of the difference, but I expect that the US prices don't include sales taxes etc...
Law of Economics Applies... (Score:2, Insightful)
Thou wilt be charged what thou art willing to pay for it.
Quite simply Adobe, Microsoft and probably others have determined that Europe will pay that kind of money for their software where the United States won't pay that much, and have computed the optimal price point right there. Sad but true Europe.
Having said that, time to start an import/export business with cheap software in the United States going to Europe :-)
You answered your own question (Score:4, Insightful)
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.
Re:You answered your own question (Score:5, Insightful)
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?
Re:You answered your own question (Score:4, Insightful)
Those costs are still a tiny fraction of the actual development costs...
Real question: Why can they? (Score:5, Insightful)
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:You answered your own question (Score:3, Insightful)
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.
Re:taxes (Score:5, Insightful)
Taxes are still not 130% on top of the RRP ;)
Re:Socialism (Score:1, Insightful)
And that doesn't account for even half of the price gap. Guess again.
Re:sheesh (Score:5, Insightful)
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?
Re:taxes (Score:1, Insightful)
Since sales tax in Germany is 19%, that explains quite a bit of difference already.
Dreamweaver US = $399
German Sales Tax 19% = $76
Total Difference = $501
Please explain the other 85% of the price difference. Also, don't call 15% of the difference "quite a bit of difference".
Comment removed (Score:5, Insightful)
Its the way they convert (Score:4, Insightful)
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.
Hassle factor (Score:5, Insightful)
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)
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.
Re:Yes and No (Score:2, Insightful)
The localisation costs are complete bullshit...
Software is cheaper in canada, where it has to support english and french, compared to england where it only needs to support english. American software that only supports english would also sell just fine as-is in england.
And then there's smaller countries who are forced to use the english version anyway, because software companies don't consider them important enough to get a translation, yet they often still end up paying higher prices.
Still, it's yet another reason to use open source, same price everywhere and no vendors screwing you over because they feel like it.
Incidentally, unfair pricing (ie not based on real quantifiable factors) amounts to racism, and something should be done about it... In order to charge more in one country over another, it should be mandatory to document why (ie import taxes etc), and in the case of multiple localised versions make the original available too at a lower cost. Charging someone more just because they happen to live in europe should be considered racial discrimination and punished appropriately.
Re:Not only software... (Score:3, Insightful)
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:In Canada, too. (Score:1, Insightful)
Prices in Canada are higher because of higher taxes. Canadians and Americans have very similar expectations for pricing. The difference in price can be attributed to small incremental taxes. At every level of production, cross border shipping, transportation and retail there are higher taxes. This is passed onto consumers. If Canadians want to pay the exact same prices for goods as Americans then they should be prepared to do away with many of the social programs they have become used to.
Re:Real question: Why can they? (Score:3, Insightful)
Re:Or $0 if you get it from https://thepiratebay.o (Score:1, Insightful)
What's that dad? you lost your job working as a blacksmith? Why is that? People don't ride around on horses so much anymore?
Software is destined to fall to zero cost eventually, simply because it can. So you can either accept that and find a more long term proposition (ie work for a company that makes software as an aside to their core business, ie a hardware or support vendor) or you become obsolete.
Selling software isn't sustainable, there is no scarcity once software has been written, distribution can be infinite with no cost and code can easily be reused. People will move to the cheaper, more flexible and more open option long term, just like they did with x86 compatible hardware. People are also very much averse for paying when they don't have to, and it's only a matter of time before people realise that software doesn't need to be paid for.
The world changes, deal with it.
Re:sheesh (Score:4, Insightful)
then don't buy it. if the price is too high, then they have priced it out of your range. deal with it.
Movie theatres set different prices during the day. Loyal customers get given discount coupons by many companies. Some places let the unemployed, or retired, or disabled people in cheaper or even free. Some bars let women drink for free, some events let people in free in fancy dress, some places give discounts to members of the armed forces.
NOT EVERYONE GETS OFFERED THE SAME PRICE.
There is no major news here. Sorry if that deflates the slashdot readers attempts to justify theft though, as 99% of stories on here attempt to do.
Re:Real question: Why can they? (Score:5, Insightful)
Re:Real question: Why can they? (Score:4, Insightful)
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:Taxes, for one thing. (Score:1, Insightful)
If you're outside of the EU trying to sell software inside the EU, you have to get as much money as you can up front so you can pay the fines the EU is going to slap you with when you become successful and outsell EU produced software.
Re:Because they can (Score:1, Insightful)
Europe gets less expensive drugs from Big Phrama because they value the health of their citizens above their gross productivity (thus ensuring a higher net productivity and quality of life) and make it a point when dealing with the drug companies. America gets less expensive software from High Tech because they value the gross productivity of their citizens over the health of their citizens (thus ensuring higher net profit and lower quality of life) and make it a point when dealing with the software companies. Which would you rather have?
Re:Yes and No (Score:3, Insightful)
Your argument is laughable. I get the feeling you don't understand what racism actually is, since this clearly isn't it. Something is worth what people are willing to pay for it, so that is what companies charge. With your plan, it wouldn't be possible for companies to subsidize their product in developing countries. Do you hate people that live in countries less affluent then your own?
Re:Real question: Why can they? (Score:4, Insightful)
I was wondering about that sort of thing. The EU tends to side with customers a lot more often than the US does and there are a lot of rights that are available in the EU when dealing with consumer protections that I don't believe we in the US get.
So there is going to be a higher cost for software in the EU in order to offset that. What I don't get though is why the cost difference is apparently that high.
Re:Really? (Score:4, Insightful)
Of course finlands probably the only country in the world where all the mcdonalds employees speak english
So what do they speak in the US, UK and Australia?
Re:Real question: Why can they? (Score:4, Insightful)
Re:Real question: Why can they? (Score:2, Insightful)
Re:Real question: Why can they? (Score:2, Insightful)
Semi-first world countries? Just goes to show how out of touch BadAnalogyGuy really is with the rest of the world.
There. Fixed it for you. :-)
Nothing new here (Score:5, Insightful)
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.)
Re:Real question: Why can they? (Score:5, Insightful)
I would argue that "semi-First World country" is a monumentally stupid phrase, so add our failed education system to that list.
Re:Or $0 if you get it from https://thepiratebay.o (Score:4, Insightful)
Microsoft make money because the market has not matured enough yet... They also snuck in through the back door as the hardware market was maturing - people went for the cheaper more open hardware, and overlooked the impending software lock-in because it was a relatively small cost compared to the benefits of cheap open hardware from multiple vendors.
As for your comment about little financial motive...
There are many ways to make money that don't involve directly selling software. IBM and RedHat make a lot from support, Many companies make a lot of money from hardware, while investing in making free software (including free as in beer like drivers).
And your claim that very little software being created without someone hoping to make money from selling it, just look at how much free software is available, there is a truly insane amount of software available for free these days.
On the bright side (Score:4, Insightful)
Re:Some americans, mind you (Score:4, Insightful)
One has to remind oneself that the image the US gives itself internationally mainly comes from the people on the "lower" end of the intelligence or/and educational-scale from time to time.
Actually, I have never actually meet anyone idiotic from the US. In my experience, most you meet are nice, intelligent and well informed people, so I assume that the idiots simply are a very vocal minority.
One have a tendency to remember the bad experiences better than the good ones, though. =(
Re:Nothing New (Score:3, Insightful)
That's because nobody who needs Office Profession buys retail copies. The Home Version of Office costs R$ 200, which is US$ 130. Very cheap, if you consider that most brazillians spend from R$ 1200 to R$ 2000 on their computers.
Companies buy Office at bulk prices, which range from R$ 700 to R$ 200. Considering that the employee using the software costs (for an underpaid person) at least R$ 36000, it's a very small price to get work done.
Re:Real question: Why can they? (Score:1, Insightful)
Holy fucking shit, Switzerland is a third world country? Who the fuck knew?
Seriously, pick up a fucking history book sometime, you ass.
Re:Nothing New (Score:5, Insightful)
Actually, these price diferences are true not only to software but hardware as well. And the value has nothing to do with the versions being localized.
In fact, the price difference applies across the board. Pretty much everything in American is just dirt cheap.
(Which is why, when we're passing through the US lat this year, we'll be arriving with two empty suitcases each and leaving with them stuffed full of clothes, electronics, and the like. The money saved over buying in Europe or Australia will pay for a non-trivial portion of the trip.)
Re:Real question: Why can they? (Score:3, Insightful)
I know France also forbids it (remember the whole eBay debacle?). The Netherlands does as well. IIRC, most of Europe does...
No, it pretty much is everywhere in places like London. Traffic cameras, Congestion Charge cameras, the Tube, and private store cameras supposedly being linked to the Met CCTV operation.
66% is pulled out of his arse, but some countries are in the 50-60% range (IIRC, Sweden).
WRONG! There are SO MANY social programs available to the poor in the US. From church groups to United Way to state-funded programs, nobody goes hungry unless they 1) choose to, 2) kick themselves in the ass where they are no longer welcome in places like soup kitchens. I've seen some of the poor in European cities--they are far more downtrodden, have more mental diseases, and are truly ignored by society. Americans have been found to be the most generous individuals worldwide when it comes to charitable contributions. But Europeans prefer to ignore facts like that...
Europe does not have "freedom of speech"--Europeans have "freedom of protected speech". There's a huge difference. Go to the Anne Frank house in Amsterdam--they question why Americans allow all forms of speech, including hate. Neo-Nazis are illegal in most (all?) of Europe not by actions, but by beliefs. Their beliefs and speech are considered illegal, even if they don't do any illegal actions. With "freedom of protected speech", a country could that gay protests are not protected, then anyone participating in such a protest can be arrested. Some American famously said "I may not like what you say, but I'll fight to the death for your right to say it"--a principle that many Americans hold dear.
Re:Real question: Why can they? (Score:5, Insightful)
Europe really is a decade or two behind the US economically.
Europe is economically much different from the US. It's not behind the US in any way. Per-capita GDP in the US is in the low 40kUSD range. Per-capita GDP in the EU was above 40k dollars before the ten-country admission in 2004 that included lots of former soviet states. It is now lower, (35k if I recall correctly) but will naturally correct as the EU absorbs the former soviet republics (which had staggering low productivity).
Europe is different. More bureaucratic, with softer growth surges and almost no recessions on record. I don't know if it is better, but it's definitely not a worse economic environment.
It's mainly because they blew all their infrastructure up in WWII[snip]
The Marshall plan took care of this in two decades time. Great effort by the US btw, and definitely the kind of diplomacy a modern capitalist society should use and abuse (instead of classic brute-force-diplomacy)
, but also because of anti-competitive protectionist legislation.
The EU abolished most protectionist legislation between countries in the EU. Intercontinental protectionism is on par with the US.
"Semi-First World" may be an overstatement, but there is some truth to it.
The only revealed truth is that the author couples a sense of superiority with major ignorance about the rest of the planet.
Re:Because they can (Score:4, Insightful)
I suspect you're right. Government taxes is the reason. It's the same with gasoline. We Americans, Canadians, Europeans all pay the same amount for gasoline (approximately $3.50 a gallon), but American/Canadian taxes are only ~50 cents whereas European taxes are $3-4 dollars.
So the final price is inflated because of government theft.... er, taxes.
Re:Because they can (Score:3, Insightful)
Marginal utility analysis assumes commodity-like uniformity of products and services AND free and open competition. Remove these assumptions, and much of the analysis collapses. My point, for those not paying attention, was that analyses of markets using traditional econometrics (of which marginal utility is one) is ineffective in markets that are not competitive. Moreover, I argued that highly profitable markets are - by definition - not competitive.
Appeals to diminishing marginal utility speak not at all to the fact that high profit margins are categorically impossible in a truly competitive market, irrespective of that market's positioning on the supply and demand curves.
A further irony is that the classic paradox used to illustrate diminishing marginal utility - water vs diamonds - is itself flawed: diamonds are perhaps the best example of "conspicuous consumption" wherein buyers actively seek high prices with minimal utility in order to flamboyantly demonstrate their wealth, power and status by way of flagrant wasteful spending.
Re:Real question: Why can they? (Score:5, Insightful)
Some American famously said "I may not like what you say, but I'll fight to the death for your right to say it"--a principle that many Americans hold dear.
I wonder how all those Americans will feel when they learn that the famous American who said that was Voltaire, a Frenchman...
They're simply boosting profits (Score:5, Insightful)
As far as translation...for starters they never actually give you software that uses British English so we see no benefit in it and do you think they get "file", "save", "copy, etc translated for each version? A previous employer of mine only paid approx. £110,000 to get a whole book translated into about 26 languages. It was a small company so they certainly didn't get a good rate. Now if Microsoft or Adobe somehow pays double that, that means they only have to add £1 per disc if they sell 220,000 copies which they will. There is no excuse for something that should cost us £150 to cost £300 (or more).
The only reason they do it is to boost their profits because European currencies are worth more than the dollar. So they abuse their positions to sell over priced software to help their bottom lines. That's the only reason.
This is also yet another reason why I use products like Open Office and Gimp. Honest companies, like JCreator, will get my money too seeing how they don't try to rip me off for not living in the US.
Manufacturing base? (Score:3, Insightful)
Re:Yes and No (Score:3, Insightful)
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:Real question: Why can they? (Score:5, Insightful)
No no no! You are basing your opinion on PPP [wikipedia.org], purchasing power parity, that is totally useless way to measure economies. The right way is to use raw money that is GDP nominal. So the right source that we should be looking is the list of countries by GDP (nominal) [wikipedia.org]
Unfortunately some asshole has removed once again EU from the list and other idiots are using PPP figures in the article telling about the economy of the Europe [wikipedia.org]. Fortunately GDP nominal per capita can be found from the article about the European Union. [wikipedia.org]
Here is short list of countries. It includes besides USA, EU and Japan notable EU countries below US GDP per capita and EU countries over the US. What can be seen from this list is that European countries in general have been gaining against both USA and Japan and some small countries have leaped over them. If we would have more recent figures that would take into account the decline of US dollar the numbers would favor even more European countries. So all in all, by GDP per capita nominal, we can conclude that all the countries in the list are more or less first world countries.
Hmmm (Score:3, Insightful)
I'm a British (well English) person so I count as well Europeansish I guess. Well I can talk the same language(ish) as Americans - but politically more aligned with 'Europe'... I guess.. Well actually my political compass seems to point to 'left-wing' libertarian - so left-wing swing to Europe, but US libertarian seems to be right wing... and and and....
I think the take-away point is that everybody is unique and tends to get painted by others by the country they belong to. US stomps across the planet gunning for resources with an illiterate army equipped with the finest munitions on the planet etc etc. I conversely appear to have forgotten my bowler hat and am curiously happy about the loss of 'The Empire'
Anyhoo - we're all just people and all different and most of us are quite struck by the blindness of others (Evangelicals spout pretty much verbatim that of Al-Quaeda, with just the odd noun transposed).
All boils down to the basic human instict that "I'm right" - and where would we be if we were all in a perpetual state of flux and indecision?
To take for example a 'secularism' - We're not going to have god in our legal system... instead that's replaced by people pledging allegiance to a flag? Nobody notices anything strange here???
*waves hands*
I've travelled the world. Americas, Europe, Asia, Middle East for work - everybody I've met has been lovely. Whole planet is filled with the same people and as a rule of thumb we're 'lovely'.
Sure any travellers here have had the same experience.
Oh I'm rambling on, losing my point, and this is going to be buried in the middle of an un-read thread - but... Oh - back to the original point. Yes - we're shafted on prices in Europe. But somebody has sat down and worked out these prices as what people 'are willing to afford'. If you don't like them, don't buy them *shrugs* it's a free market.
Still arsey over the price of my Rock Band instruments - but hey - it's only money.