Apple price policies in Europe

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Ben Hammersley complains about the maxi markup that Apple makes on currency exchange in the UK:

According to the press releases I just received from Apple UK, iLife 04 will be $49 in the US, which is £26.88 under today’s rates. Even so, the UK price will be £39. JamPack is $99, which is £54.31 in real life, but £69 in Apple UK pricing. The price for the new 15GB iPod? $299 in the US, £164.03 under the current exchange rate, £249 from Apple UK.

There is only one mistake in this reasoning, Ben lists prices that include the UK VAT, currently at 17.5%, while he compares with the US Apple Store prices which do not include taxes. However, his point remains valid. To compare apples to apples (I had to make this one), let's first compare a few products on three Apple Stores, the U.S., the U.K. and France, prices are listed in the local currency without any sales tax:

Apple Store local price US ($) UK (£) FR (€)
iPod mini 249 170 250
iPod 15GB 299 212 292
iLife 49 33 41
GarageBand Jam pack 99 59 83
Final Cut Express 299 169 250
Xserve G5 monopro 2999 2042 2999

Now let's normalize this in Euros at today's rates (1$=0.79€, 1£=1.44€). I could have used USD but this will give an idea to the U.S. reader on what the prices should look like for a European:

Prices converted in euros US UK FR
iPod mini 197 245 250
iPod 15GB 236 305 292
iLife 39 48 41
GarageBand Jam pack 78 85 83
Final Cut Express 236 244 250
Xserve G5 monopro 2369 2940 2999

And now, here is the extra markup earned by Apple on the currency exchange rates:

Difference vs. US prices UK FR
iPod mini 24.4% 27.1%
iPod 15GB 29.2% 23.5%
iLife 23.5% 5.8%
GarageBand Jam pack 8.1% 5.8%
Final Cut Express 3.2% 5.8%
Xserve G5 monopro 24.1% 26.6%

As you see, there are differences from as low as 3.2% for FCE in the UK to as high as 29.2% for the iPod 15GB in the UK. Also, it is obvious that the price scheme is different between the two countries, with a surprising difference for iLife which incurs a markup of 23.5% in the UK vs. 5.8% in France.

Apple has always been very conservative in protecting itself against currency exchange risks, and when you see the huge variations recorded for $/€ over a year, there have been variations of 10% in about two months. However, when you see that, on two products with the same price (iPod 15 and FCE), Apple is applying 3% in one case then 29% for the other, one may wonder how the exchange risks are managed exactly. Add the VAT on top of that (17.5% in the UK, 19% in France) and European citizens are entitled to feel a bit over-milked. A price cut and more reasonable exchange rates would be greatly appreciated.