Standard practice in rip off Britain (or rip off Europe if you like).
Doesn't that provoke illegal downloading?
It's just the same with Apple's products. I think the yanks have difficulty admitting the fact that their currency is so weak and have to bolster their egos by overpricing elsewhere.
provoke illegal downloading?
People who have a tendency to steal aren't inclined to care much about the price anyway.
One other possibility, Bill simply wants to recoup some of those EU fines.
Bill Gates was asked about the pricing in Europe on the BBC last night and put it down to "fluctuating exchange rates".
So Bill thinks the Pound and Euro are going to plummet by 50% then.
What are the issues of going to America and buying a copy? Exactly what are the differences?
How much of the price tag is UK tax?
Will the price come down after a year or two?
With previous Windows versions, in some store if you bought any hardware, you could get an EOM version, which is always cheaper.
[edited by: Marcia at 9:27 am (utc) on Jan. 31, 2007]
I saw Bill Gates talking about it on BBC news last night. Very much ducking the question of US/UK pricing differences. I know that we have some higher costs in the UK thank's to higher diesel prices leading to higher distribution costs, but double the US price, c'mon!
|What are the issues of going to America and buying a copy? Exactly what are the differences? |
Apart from the cost of the flights it would take ages. <snip>
But seriously, most companies like Microsoft,Adobe, etc. don't allow downloads from the US site unless you have a US Address and a valid zip code.
See also this thread from last month, [webmasterworld.com...]
[edited by: lawman at 12:15 pm (utc) on Jan. 31, 2007]
[edit reason] See Foo Charter Re Dubious Legality :) [/edit]
The problem with this is, if you do not have a US credit card from a US bank(first six digits of credit cards). The transaction will fail, for some companies. You will need a US addresss, and a US credit card for this to work. Im not sure if Microsoft has implemented this.
Some mail forwarding services in the states also offer US prepaid credit cards, to get around this little annoyance.
I would assume that with all the anti-piracy stuff that Microsoft have surely included a geo-detection method during install. ;)
Treasure Island.....alive and well.
Anyone remember the European car price wars.
I personally took on Mercedes using EC legislation in the eighties which received National media coverage, maybe some one should take on MSN.
[edited by: JudgeJeffries at 12:42 pm (utc) on Jan. 31, 2007]
Software isn't the only area where Europeans pay higher prices:
Far be it from me to come to Microsoft's defence but as a UK business I'd charge UK customers a lot more than US ones.
My UK offices are staffed by UK employees and I pay UK taxes on this part of the operation. These taxes are substantially above what a similar business faces in the US. Don't look at just consumption taxes (like VAT), look at the bigger picture. My employees here pay income tax just like the Americans do. But there's an additional 23.8% national insurance for each employee. That's a huge chunk and is equivalent to an American paying all his taxes and then .... his employer paying them all over again. My business rates are higher, my usual business expenses - from fuel for transport to business insurance - are highly inflated because the government takes a big cut. Here in the UK a business that sends a few technicians to London every day spends over £1,500 a year each in "congestion charges". Sure there are local costs in every country that push prices up a bit but nowhere is it so bad as here in the UK. And to pay all those taxes UK offices have to charge their customers more.
Sure, there's some rip-off Britain. Blame some of that on greedy businesses, but let's not forget that there's a lot of blame to be laid on ridiculous, silly, punitive and unfair taxes.
As Marcia says, you can get an OEM copy cheaper. However, I believe there are some new restrictions and you can't get it with a minor component like a FDD, you have to buy a MoBo.
oddsod brings up a good point. I'm sure Microsoft are paying taxes to those Governments which in turn have to be passed on to the buyer.
While many Americans complain about our taxes, they are somewhat minimal compared to other countries like the UK. I can feel your pain. It won't be long though before our rates our inline with the rest of the World. :(
|additional 23.8% national insurance |
In America that money, and then some I think, goes to insurance companies. Not a tax, but a cost of doing business just the same.
Another note about exchange rates: just the fact that currency is being exchanged adds an element of risk which (accountants agree) must be accounted for.
Actually, thinking about it some more...
...what's to stop a buyer in the UK ordering their copy of the Microsoft Windows Vista Home Basic Edition (Upgrade) through Amazon.com instead of through Amazon.co.uk?
And what's to stop that same person ordering hundreds of copies and then reselling them, still in their shrink-wrapping, for GBP 75 on ebay?
Surely hundreds of people must be doing this already, no?
Great point Ronin, I wonder what shipping costs?
It appears to be free (unless I missed something).
Oddsod this really does not have a lot to do with tax. M$, Adobe et al set these prices. Essentially it is they who decide what we will pay, not the UK goverment (and I am not trying to defend them).
BDW, Company Hypothetical Ltd operates in Countries A and B.
In A they pay 50% tax so to take home £50 they need to make £100.
In B they pay 90% tax so to take home £50 they need to make £500, an additional £400.
That extra £400 comes from higher prices. Sure, they can sell in B at the same price as A and make only £10 instead of £50. But they're a business, not a charity and the shareholders will have their b*lls for breakfast if they don't maximise profit.
ronin, AFAIK, the EULA for Windows has long been country restrictive. As far as Microsoft is concerned using a US licence in the UK is tantamount to using a pirated copy.
You may be correct in what you say but it does not apply in this case. The reason that prices in the UK are as much as double those in the US for the same product is not just tax related.Vendors have been ducking and diving on this for years. They are all at it!
|I saw Bill Gates talking about it on BBC news last night. Very much ducking the question of US/UK pricing differences. |
The poster above saw Gates evading the issue when questioned. Why didn't he just use your ready made excuse if M$ are not directly to blame? From a marketing perspective wouldn't it have been much easier for him to claim that it was our tax system to blame and therefore out of his control?
Jon Honeyball of PC Pro has been featuring instances of what amounts to price rigging by US software companies in the UK and Europe for a year or two and that's what it is ... price rigging.
We are getting ripped off plain and simple and in this case it is not by the tax man.
Ask Jon Honeyball how many PC companies they've actually done secret shopping at. The bulk of the credibility of the PC Pro mag (and reviews) is based on the claim that they regularly check up on the companies whose products they feature in the magazine. They don't. Hardly ever. In fact, they should be investigated for this con. I wouldn't go believing everything you read in there. Like anybody in the news business they sell more copies if they can sensationalise everything .... and they often do. They are one of the more respected PC magazines but they are often full of cr*p just like the others. For many years I've worked very closely with various PC magazines and you'll have to trust me on that ;). If I recall correctly PC Pro is one of the mags that had to apologise to Dixons when an OFT investigation [theregister.co.uk] cleared Dixons of that same "rip-off Britain" charge.
Bill Gates may or may not have evaded the question but as a figurehead for MS he's hardly likely to go criticising national governments/tax regimes. He plays the diplomat and often socialises with the very people responsible for plucking his tax feathers.
You may not accept it but direct and indirect taxes on businesses are a major determinant of the price you pay. Businesses are opportunists and would use that as an excuse for profiteering but it is naive to suggest that given the higher overall tax here the product should be sold for the same figure here as it is in the US.
|Businesses are opportunists and would use that as an excuse for profiteering but it is naive to suggest that given the higher overall tax here the product should be sold for the same figure here as it is in the US. |
I don't think that prices should be the same, just similar, and I don't think I am being naive but I am happy to let you have your opinion.
Taxes in the UK may be a bit higher than in the US but it is naive to suggest that this accounts for the gross differences in pricing. Let's forget about Bill Gates. Many of the larger US software companies have been asked to explain the gross price differences by PC magazines and they waffle on about this and that but they seldom use local taxes as their excuse.
Why? Because they know this is quantifiable and hence too easy to defeat their arguments.
Added: Oddsod the case you quoted was almost eight years ago and it applied only to PCs, not software. PC prices are not the problem. Why? because we also produce them here and there are hundreds of worldwide manufacturers in competition with each other. The same cannot be said of products from companies like M$ and Adobe.
[edited by: BeeDeeDubbleU at 11:55 am (utc) on Feb. 1, 2007]
<deleted. I don't have the time to explain how direct and indirect taxes (and cost of regulations/compliance) affect prices and how those costs are so much higher in the UK than in the US or Canada. Good luck to you and PC Pro in your campaign against "Rip-off Britain">
Economies vary by region. No one questions that a home in the Hamptons costs more than a home in upstate rural Indiana.
The price of a hamburger also varies, often in direct proportion to the local real estate market. Those hamburger cooks need to live somewhere right? What's paying their mortgage except for the profits from hamburgers? Obviously big multinationals like Microsoft employ people in all their major markets and have to pay local economy salaries to those employees as well as pay local economy leases on office space and local economy prices on freight and storage costs.
When you talk about having identical (or very similar) pricing across different economies you are also suggesting a different completely unfair scenario:
Let's take oddsod's example where they could sell the same product for the same price in two different countries and make $50 in country A and $10 in country B. Isn't that unfair to the people in country A? If $10 is enough money to turn a profit in country B, then why can the company rip off the people for an extra $40 in country A?! Don't think that the people in country A won't realize that prices are normally different for most products and that the company is probably making more off them than the folks in country B.
Equalizing profit per sale in different economies is a fairer pricing method than equalizing price per sale.
I am well aware of differences in the economies in different countries but if this is a tax issue, why when challenged, don't they use this in their defence?
|Obviously big multinationals like Microsoft employ people in all their major markets and have to pay local economy salaries to those employees as well as pay local economy leases on office space and local economy prices on freight and storage costs. |
Come on ... for downloads.?.?.?
Paypal recently introduced Paypal Payments Pro here in the UK. They charge £20 per month versus $20 per month in the US. I emailed them to ask why we had to pay double the US rate. They did not even answer. I wonder why?
No, I am afraid that "rip off Britain" is still very much a fact. Google it and you will find more examples than I could ever offer.
|Equalizing profit per sale in different economies is a fairer pricing method than equalizing price per sale. |
Fairer to whom? Equalising affordability per sale in different economies is the fairest pricing method. If we're going to talk about fairness, the product should be as affordable to an individual in the UK as it is to an individual in the US.
Last time I checked, UK citizens do not earn twice as much as US citizens.
|Come on ... for downloads.?.?.? |
Do they employee UK citizens?
Do they own/lease property in the UK?
Do they pay for advertising in UK newspapers, magazines, radio and television?
I'm not defending Microsoft, just the idea that businesses can have legitimate reasons for variable pricing, especially when operating in multiple countries.
|why when challenged, don't they use this in their defence? |
I think it's silly for a company to spend time explaining which of the myriad reasons for variable pricing are in effect in any particular circumstance.
Maybe this is a good excuse for the UK to switch to Mac? :) The full version of Mac OS X version 10.4 "Tiger" has closer pricing. US: $129.00 [store.apple.com] UK: £89.00 [store.apple.com]
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