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I believe taxes come into play too. Apparently European prices always include sales tax (VAT or value added tax, BTW for dutch speakers) while US prices don't as they vary from state to state.

Tyr, I'm used to see valuable comments from you-- not a comment that seems to be made from someone who didn't read the column: I specifically said that I removed all taxes from the prices, to create a level playing field .

Edited 2006-03-05 22:07

Off-topic, but could people stop going back and editing their posts like this? You could have left the post there, and added the "Edit: As Thom rightly pointed out I was talking nonsense" without removing the message. Or even better, not use the "Edit" function at all, and just reply to Thom's post apologizing.

While it's not a big deal here, since Thom included the post in his reply, there have been other instances where a reply makes no sense because the original post was removed like this.

While it's not a big deal here, since Thom included the post in his reply, there have been other instances where a reply makes no sense because the original post was removed like this.

I didn't want to bring down the signal-to-noise ratio with additional posts, well so much for that idea ;-)

The most significant difference is because of legal requiremnt for at least 1 year warranty here in Europe. The average 8-10% difference you see is there to compensate mainly for two things:
- warranty extension from 90 days to 365 days.
- FX volatility as teh company's P&L is reported in dollars.

Tom, now does it make sense to you why Software is approx the same price while hardware is more expensive? Hint soiftware doesn't really have any enforfeable warranty while Hardware does..

There is already a 1 year warranty in the US, it's only 90 days of free support.

So if the legal reguirement is to give 1 year support then I can see the additional 10% avg price hike.

Reagrding the 1 year warranty, in New Zealand, the warranty, or what is known as the 'expected life of the product without failure' is considered 2-3 years.

If you have purchased an Apple product in New Zealand, don't get pulled into the 'extended warranty' crap - they, Apple, have a legal obligation, under the Consumers Guarantee Act to ensure that your computer, give normal use, to last 2-3 years without a hitch.

Remember folks, legal requirements surplant what ever the vendor has in its small writing.

The European Union rule for warranty is actually *two* yers, mandatory, at least for defects not spottable by the customer.

The European Union rule for warranty is actually *two* yers, mandatory, at least for defects not spottable by the customer.

No, not the warranty. It refers to a "2 years right to file a complaint". The guarantee/warranty period is 1 year only. But the judge will "listen to your arguments" the following 12 months after the warranty expires. After that, you are one your own and usually wrong
.

@ asupcb

The VAT taxes don't operate exactly like a sales tax because the product is taxed every step of the way in the manufacturing process which means that they may be including VAT for the processor, case, powersupply, hdd, dvd drive, etc. in the cost of the product.

Errr, companies usually get a refund for all their paid value-added taxes at the end of the fiscal year. So, it's only consumers who really pay the VAT, thus it is a sales tax.

Well that explains it. Really no need to go any further.

I agree this Column need a bit more work, it sounded more like a vent.

Well that explains it. Really no need to go any further.

No, it does not explain it. Why? Because there are bound to be laws or legal requirements in the US that negate the effect of the extended warranty-- laws that have no equiv. in Europe.

Other than that, I don't think an extended warranty can account for a price raise of 7-9%.

Oh and besides, I also don't think the extended warranty is the cause of the absurdly high price raise of the low-end Mini, now is it?

Edited 2006-03-05 22:54

Furthermore, Apple does not give you a two year warranty in Europe. I live in Belgium, and that is only an hour from The Netherlands so things aren't really any different. Same goes for France and Germany. Apple sticks to the one year and 90 days of free calls. That's it. No extended warranty of 2 years. (However, they should! So in fact, Apple is doing something illegal )

I think that the main reasons for a higher cost are:
* Localization (For Belgium, this means an Azerty keyboard, both dutch, french and german localizations of the manuals and further tiny stuff).
* The overall higher cost of labour in Europe. Since someone needs to deliver it to your doorstep.
* And then come all kinds of European regulations that require some minor modifications. (The one that pops in my mind is the limit of dB that the iPod may produce in Europe is quite a bit lower than in the US).

Is all this really summing up to an additional price tag of about 10% ? I don't really think so. It is a small reason, but not THE reason.

So why do they charge the extra money?
Hell, maybe they want to increase the penetration rate of Apple in Europe drastically. Therefore, they have been charging extra high rates from Europeans in the last 30 years to launch a massive advertisement campaign to make all Europeans change to a Mac. Or they just see that there are no alternatives in Europe and so they charge a bit more. Just for themselves. And the accountants of Apple love it. It just makes Apple think a bit different. (wow, what a play of words.)

EDIT:
I did a quick check here. Where can we buy a Mac? The choice is in fact quite limited:
- Apple Store online.
- Apple Centre or other Apple vendor.
- ...
- Ah, that's it. Nope, no Amazon. Other sellers? Sure, but they have to buy it from Apple themselves. Any others? No, well, at least none that John Doe would be able to find and order from. Even contacted a friend of mine who has a computer store. He buys his Apple equipment from a reseller. And that reseller buys his stock from.... (you know you know it) ... an Apple Store.

Edited 2006-03-05 23:20

* Localization (For Belgium, this means an Azerty keyboard, both dutch, french and german localizations of the manuals and further tiny stuff).

Dutch Macs ship with the same keyboards as US ones. True Dutch keyboards are very rare, actually (I have one, a very old IBM keyboard that came with a real ps/2).

* The overall higher cost of labour in Europe. Since someone needs to deliver it to your doorstep.

As I already said, all prices are excluding shipping costs.

* And then come all kinds of European regulations that require some minor modifications. (The one that pops in my mind is the limit of dB that the iPod may produce in Europe is quite a bit lower than in the US).

That does not matter either; you might as well say: the US requires a higher dB limit, so they must be more expensive in the US. Get my point?

Just what I wanted to say myself. The warranty laws in Norway is like this aswell, perhaps even more strict than EU ones. And in addition to that theres always been like companies set different prices for different countries compared to how the financial situation is in that particular country. It's just easier to see it now when we can put each (next to identical) store next to each other and compare.

Now I don't really think that the Mac prices are that bad at all (except from upgrading RAM and similar in AppleStore...I rather buy it online), atleast not for the Mac's I got (iBook G4 and iMac Core Duo). Mac's are amazing machines, with a great OS; and hardware that competitors actually don't offer at lower prices (I have yet to see a "PC iMac" that's cheaper than the iMac). You get what you pay for. With Mac's you get great quality! ---I should note this is just my personal opinion. What others might think is up to them. I dont want to start over the whole OS war thingie...---

The please explain Apple why they only give 1 year of warranty in Spain.

The myth about 2 year warranty in Europe comes from a picky law with lots of small letter, that, summing up, comes down to the customer having to prove to a judge that whatever failed after the first 6 months is not due to his/her fault.

Really cool law, IMHO. It effectively shuts the mouth of stupid voters while taking power from them.

Go check what your national law says instead of relying on what Apple writes. In Denmark i get 2 years of warranty on the purchase plus 2 years on any repairs/replacements from the day of the repair, despite Apple claiming (on their website) it to be 1 year from purchase and 90 days from repair date. It doesn't matter what they write or even make you sign, luckily i can not sign away my rights.

Well, that's what I was writing about. Spain's "mandatory 2 years of warranty" are a joke, since they put the burden of proving something broke because of malfunction instead of misuse in the customer's side past the first 6 months. If you can prove it, sure, you have 2 years. How you prove the HDD broke because it was faulty I am not so certain…

Congrats for having a parliament that does not try to screw you… We do not seem to be that lucky.

our apple reseller within european union forces consumers to buy "additional year of warranty" if we are consumers (i.e. not companies). So if you want to buy a mac here and you are not a company, you simply have to pay additional year of warranty in addition to 5-10% difference in price and simply won't sell you a mac without that additional year of warranty.

So no, this is not the case.

This is one of the things why I decided, that I won't buy another mac. I have powerbook g4 and i'm going back to classic manufacturers.

In Italy Apple sells with 1 Year warranty.
The EU law states restrictions to the seller to sell a compliant product according to what is adversized, otherwise the seller has to return money in the first 6 months.

If a company wants to enter a new market, they should absorb the cost of localisation.. It's hardly a money burner, one person, a few weeks work tops for each language?
It's naive to think everywhere would use the language that the initial product shipped with.

And this goes for England too, far too often I buy a product off the shelves, and some lazy company hasn't gone to the effort to localise from en-us to en-gb.

And this goes for England too, far too often I buy a product off the shelves, and some lazy company hasn't gone to the effort to localise from en-us to en-gb.

Join the club; New Zealand uses GB English, and yet, the American company thinks we use the Australia dictionary! dear god, someone, please, wake them up over there; I know the world stops at the shores of the US, but honestly!

I know the world stops at the shores of the US, but honestly!

Face it: we're bigger, better, and more beautiful than you Brits, Kiwis, Aussies, & the rest of the former Empire!!!

I know... none of them is really true. But getting all three b's in a row was irresistible.

I'm gonna get voted down for this, aren't I.

:P

Well, I wouldn't say that - you left just when the empire was starting to get good; ah, Devonshire tea, cricket, rugby, double entendre's and sexual innuendo's; all part of our superior pommy culture :-)

Anyway, back to the original topic; what is so bloody hard about defaulting to Great Britain dictionary/language for those of us in the commonwealth? I mean, sure, Australia may have slipped into the laziness of dropping the 'u' out of colour, but really, some of us do have our standards :-)

I was wondering whether tariffs, higher corporate taxes, higher transportation costs (gas is more expensive), and higher benefits required to employees might contribute.

Both prices *exclude* shipping costs. And since Apple products are made/assembled in Asia, shipping them to either Europe or the US should give comparable costs.

You're missing the point on shipping. Apple still has to ship it through Europe by truck to the warehouses and dealers. That is not a negligible difference given the fact that the European gasoline price is typically 3-4 times the American price. So, you have to triple the cost for gasoline from the airport to the warehouse or to the store.

But that's only part of the issue; there still remains the other points I mentioned: higher corporate taxes and higher benefits required to employees.

> Localisation does not explain the differences
> either. Not at all. Because, prices of Apple
> products are even HIGHER in Britain than in the rest
> of Europe--

And seeing as quite a lot of Apples hardware seems to be assembled in the ROI (Republic of Ireland) and therefore either has to travel through the UK or go way out to sea and back to get to mainland Europe, it's even more puzzling. The ROI is closer to the UK than to, say, the Netherlands. It's absolutely criminal. Quite often the dollar amount seems to be translated directly into Sterling. So, for example, $299 for an iPod Video would be £299, which is quite a bit more, depending on exchange rates. As the Dollar fluctuates at around £1 = $1.50 up to $1.80, I would conclude we are all idiots in the UK for paying the price hike.

No, they aren't. Not in Italy, at least.

"common" people do not know anyone owning a mac. More, many people do not really know that macs (computers) exist at all.

It's not easy even finding where to buy them (apart from the online store, obviously): there is normally only one store within reasonable range that sells Apple, apart for big cities (where you can find 2 or 3).

The same happens in Spain.

- wages standards / minimum wages in that country (eg. for people working in stores that sell the product)

Wages in the US are generally higher than in Europe.

- local taxes

Like was already said roughly 23432832 times: the prices were excluding taxes.

- costs for localization of the product (keyboards, manuals, etc)

Like I already said: then please explain why Apple's prices in Britain are even higher than in the rest of Europe?

Other than that, is manufacturing a German keyboard more expensive than manufacturing an English keyboard? Of course not. It's flicking a switch on a machine-- nothing more. And after a run of German keyboards, the switch has to be flicked back to English.

- cost of transport (gas and road tax is much higher in Europe than elsewhere, how much water & land to cross to get the product to the customer, etc.)

It's already been said 3294083 times: the prices excluded shipping costs. And since Apple products are made in Asia, shipping them to either the US or Europe should give comparable costs.

- customs (how many borders to cross to get product to customer)

See above.

Did I just lay the base for an angry minute there?

Wages in the US are generally higher than in Europe.
Forgive my ignorance, but is the wage difference in absolute pre-tax income or after adjustments for cost of living and taxes (obviously this would be affected by the former)?

- local taxes; like your forgot about 28283798 times: I am not talking about just VAT / Sales Tax / BTW, but other taxes such as environmental taxes and other stuff companies have to pay, as well as additional costs for having employees in your company. There's more than just VAT in a product's price you know.

- wages: do you know what a Burger King waiter gets in the US? 4 bucks per hour?

- localization costs: you must agree that setting up a separate product line for AZERTY keyboards (or other localization) MUST be more expensive than when the entire world has the same keyboard. Same for localized user manuals and packaging. It's not just flicking a switch. You actually HAVE TO PAY people to translate, alter the graphics, etc etc. Don't be ignorant

The fact that in Britain the prices are higher, obviously don't have to do with the localization.... or perhaps customers in the USA also have Pound (sterling) sings on their keyboard? Besides, American English and British English ARE different!! In early Mac OS versions the USA "Trashcan" was called "Wastebasket" in British English. To say that English == English is extreme simplistic. (Look at the different TV-ads for the Intel Macs for instance. They're slightly different to fit in better with the audience. This costs money you know.)

- transport: like you forgot 23827678 times: do you really think the cost of transporting a single machine is transferred directly into the sale price? Of course not. You also have to take into account the transport of parts, assembly, and transporting half-fabricates to other places, more assembly, transporting, packaging, transferring finished products to central places of distribution. Mind you, taxes may vary per country even on transporting / exporting / importing parts or half-fabricates.

For instance, customs on complete computer systems may be lower in certain parts of the world than when they are still in parts.

- customs: see above.

You are really being overly simplistic by just converting dollars to euro's and then deducting sales taxes. And you did not respond to my points about several other point I made.

Not that I blame you, everyone does that --especially Dutch peopl-- but you obviously haven't worked for any company that actually produces and sells computer products worldwide.

- local taxes; like your forgot about 28283798 times: I am not talking about just VAT / Sales Tax / BTW, but other taxes such as environmental taxes and other stuff companies have to pay, as well as additional costs for having employees in your company. There's more than just VAT in a product's price you know.

Apple has far less personel in Europe than they have in the USA (let alone the Netherlands).

- wages: do you know what a Burger King waiter gets in the US? 4 bucks per hour?

And Burger King has what to do with Apple?

- localization costs: you must agree that setting up a separate product line for AZERTY keyboards (or other localization) MUST be more expensive than when the entire world has the same keyboard. Same for localized user manuals and packaging. It's not just flicking a switch. You actually HAVE TO PAY people to translate, alter the graphics, etc etc. Don't be ignorant

Then how do you explain the fact that software, which requires much more localization than hardware, is actually cheaper on our side of the Atlantic? You see, the local. argument never held any water anyway, because the costs of localization are minimal at best (and only have to be done *once*, and *not* for every machine or copy sold), but the argument completely falls apart when you realize that software, which requires more localization than hardware, is actually cheaper here.

The fact that in Britain the prices are higher, obviously don't have to do with the localization.... or perhaps customers in the USA also have Pound (sterling) sings on their keyboard? Besides, American English and British English ARE different!

I study English, so yes, I know. But 'translating' from EN-US to EN (incl. keyboards) should be cheaper than from EN-US to Dutch, right? Then why isn't this reflected in the prices?

You also have to take into account the transport of parts, assembly, and transporting half-fabricates to other places, more assembly, transporting, packaging, transferring finished products to central places of distribution.

Apple's products are assembled in Asia. Transporting them from Asia to Europe should be no more expensive than transferring them to America.

Secondly, since the US is a larger country, supplying local supply stations should actually cost *more* than in The Netherlands, as here Apple requires fewer supply stations, and because our nation is smaller, less internal transport costs.

And something I haven't mentioned yet: how about advertising costs? Apple does a lot more advertising in the US, so shouldn't that be reflected in the prices in the US?

My point is this: some things in Europe might be more expensive to do for Apple, and some things are more expensive in the US for Apple. I think they cancel eachother out, pretty much. Neither of the reasons I heard at this point justifiy a price difference on hardware for 8.375%, let alone the *double* price raise of the Mac Mini in Europe (which everyone seems to be handily forgetting *cough*).

In any case, I've sent out a mail to Apple's PR manager in The Netherlands, so maybe he can give us a decent explanation!

Edited 2006-03-06 10:51

Thom, what basis are you using to assert that software prices are lower in the EU than in the US?

I'm just curious, especially given the tremendous variation in pricing between different stores and web sites in the US (sometimes 30-40%).

Unfortunely that store is not an Apple store, it's run by a Portuguese company.

A few years back when I started looking at Powerbooks, one could fly to NY, buy a brand new Powerbook and the price combined would be roughly the same as buying one here in Portugal

You have to keep in mind that this is Thom's "Sunday Eve Column." Basically, this is Thom's opportunity to make unjustified rants about how life isn't fair. He then proceeds to ignore or shout down any legitimate criticism, often using the justification that it's only his opinion, so we're not allowed to explain why he's full of it. See last week's elitist rant for a telling example. How this thin-skinned kid became managing editor, I don't know.

This week, we see Thom whining about how businesses charge higher prices in socialied European countries. Gee, Thom, what a surprise -- the consumer actually pays for all the regulations and increased costs of doing business in the end! Economics 101. Get over it.

While it could be a rant, it's also interesting for me (at least) to read, since artificially-inflated prices in the EU aren't immediately obvious to me here in Atlanta.

It's possible that Apple is overcharging simply because there's a fairly long history of US companies overcharging for their products in Europe and Apple thinks they can continue to get away with it...

Edited 2006-03-07 18:09

So Apple should charge less in European countries because they pay higher taxes, so in the end the items appear less expensive? People should be pretty used to niche import items costing more, because that's basically the trend all around. I end up paying more for various European goods in the U.S. than I would if I were to go to the respective countries of origin and purchase them.

"So Apple should charge less in European countries because they pay higher taxes, so in the end the items appear less expensive?"

I didn't say that, I said: "a wise pricing policy should keep local taxes (VAT) into account as well"

It is not a must, it is good marketing so that you don't piss off your customers. But Apple seems to enjoy annoying their potential buyers.

"People should be pretty used to niche import items costing more, because that's basically the trend all around."

Not true, I see the prices of electronics going down all the time, at a very fast rate. Maybe Apple by being so expensive wants people to believe that they are the Ferrari of computers. Well, I can't afford a Ferrari, and I wouldn't buy one even if I was a billionaire.

It is not a must, it is good marketing so that you don't piss off your customers. But Apple seems to enjoy annoying their potential buyers.

So Apple should charge less in European countries because they pay higher taxes? This "must" idea is irrelevant to what I'm asking you. I'm asking you, and you don't seem to be disagreeing, if you believe that Apple should make less per sale because certain countries tax more. You think that's good marketing, but it appears more that you believe it to be a better sales-strategy. Apple's marketing generally consists of elitism not chasing prices.

Not true, I see the prices of electronics going down all the time, at a very fast rate.

It is true. Prices for items, especially novelty import items (and not just specifically electronics), are more expensive all over the place. Apple isn't just an electronics company selling just electronics when pertaining to its personal computers. It's a foreign company selling a fringe product. Their world-wide share of computer sales is lower than their U.S. share of computer sales, which is already a relatively small percentage of total computer sales. They will shift the cost of their products to reflect the local market, and affix some premium for the expense of offering the product there.

Maybe Apple by being so expensive wants people to believe that they are the Ferrari of computers. Well, I can't afford a Ferrari, and I wouldn't buy one even if I was a billionaire.

Then as the Mac user might say, "You're not Apple's target market." I have to pay more for import CDs from the UK, more for decent vinegar, more for decent wine, more for pharmaceuticals, more for textbooks, and any number of products of foreign and domestic origin.