UK Prices

[Amadeus1756]

In the November issue, the new Yamaha RX-A3010 is reviewed and a price of £2000 is given. The same model is on the Yamaha US site (so with no discount) for $1999.

Is this something that is generally deemed accetable? Is this something that the WHF team would consider asking Yamaha (and any other manufacturer who follows the same strategy) about?

Many thanks

 

[Andrew Everard]

In the consumer electronics world, a direct £1/$1 exchange rate has been operational for as long as I can remember. It is unaffected by the exchange rates prevalent elsewhere in the real world.

Of course, higher taxation, from VAT to the other costs of doing business in this country, doesn't help, while the greater economies of scale in retailing in the USA have an advantageous effect on pricing there.

And bear in mind that US prices are often quoted net of any sales tax, which varies from state to state, and can also vary between cities in the same state. This can add up to 10% or so to the price, whereas of course UK prices include the dreaded 20% wedge for the Chancellor.

But yes, prices are lower in the States, and those for consumer electronics have remained so despite the huge effect the strength of the Japanese yen should have had on prices there - the dollar has softened by about 30% against the yen in very recent times, but such is the state of the market in the USA that prices haven't risen. If anything, they've kept on falling, and that's creating real profitablity problems for the manufacturers back in Japan.

Mind you, in the UK the value of the pound has fallen by some 40% against the yen in the past decade, and yet consumer electronics products imported from Japanese companies aren't just less expensive now than then in real terms, but in actual terms, too.

If it's any comfort, even UK-made goods are less expensive in the States than they are here: to take an example (and it's just one I found easily to hand), a Jaguar XF V8 - the base model in the States - is around $50,000 on the road there, and £50,000 here.The Jaguar XF is, of course, built at the company's Castle Bromwich factory near Birmingham.

A direct currency conversion - though for the reasons given above it doesn't tell the whole story – makes that US price around £32,000, and taking into account the Economist Big Mac Index, and its implied purchasing power parity, that falls to just under £30k.

 

[chebby]

As usual you need to calculate import duty + VAT + shipping costs on top of that figure.

Then factor in how much a UK guarantee (from a local dealer) is worth to you if things go wrong.

My dealer gives a free three year guarantee on such items. So if anything goes wrong I only have to take it 1.5 miles up the road rather than ship it to America. Will a USA dealer even give you a valid warranty on this item? (Also a lot of USA warranties are only 90 days.)

 

[Amadeus1756]

Thanks both for the comprehensive comments.

I doubt very much that I'd ever buy something significant from the US, largely due to the effort of return due to fault. I came close to it when I bought a Macbook Pro - the only reason I didn't buy one in the US was because the keyboard is different (I've never forgiven Mr North for allowing the colonies such independence) and I knew that'd annoy me on a daily basis (the guarantee that Apple provide is world-wide - it doesn't matter where you buy it), despite the potential saving of around £400.

Valid points, all; I'm more used to a rip-off with software (I work with computers) where there is very little in terms of real cost difference when selling in different countries.

Thanks.

 

[Anonymous]

Valid points, all; I'm more used to a rip-off with software (I work with computers) where there is very little in terms of real cost difference when selling in different countries.

Thanks.

Check the world prices of Adobe Photoshop (even in download version). It's a total scam.

 

[Amadeus1756]

Check the world prices of Adobe Photoshop (even in download version). It's a total scam.

Strangely enough I started detailing that example in my response but thought that it wouldn't add much other than raising my blood pressure!

 

[eggontoast]

So vote with your feet and don't buy the products with over inflated price tags.

 

[MajorFubar]

While exchange rates have a part to play, you also have to look at how much that money means in the local economy. It's not an exact science, but £2000 is about the same loss out of an Englishman's pocket as US$2000 is to an American.

To give a more practical example, the government department I work for pays benefits to injured UK service personnel. The amount we pay is governed not only by the severity of their injury but also by where they live. If we paid a person say £1200 a month irrespective of where they lived, in some overseas countries the literal conversion of that purely by exchange-rate could allow them to buy half the country. Ok bit of an exaggeration, but catch my drift.

 

[Amadeus1756]

Whilst that's a valid statement for your role, and indeed for something like software, but for things like an AV receiver, they're not made locally, the cost of the parts is going to be the same regardless of where the product is actually sold and so therefore Pioneer (in this example) would be selling their product at a loss in certain countries if they sold at the local rates.

Rgds

 

[MajorFubar]

Fully agree and tbh it frustrates me as much as the next man. Though I don't know enough about international trading to be able to say whether selling something for $2k in the States and £2k here nets Yamaha a similar amount of profit.

As far as software goes, while many are obvious rip-off merchants, I'll give Apple their credit (so far): OSX Lion is $30 in the States but only £21 here, which is probably right-ish in terms of the typical USDGBP exchange.

 

[KiwiMoto]

I was banging on about the same topic a few months ago when i compared AV products in GBP to NZD.I was in favour of a more streamlined 'global pricing' approach but alas opinion was that my idea was flawed :roll:

 

[bigboss]

Global pricing is not possible for most manufacturers.

1) Shipping rate varies widely from country to country.

2) Local taxes are different.

3) US is the largest market for most products, so dealers can negotiate better prices with the manufacturers for bulk purchasing. No other country can match those numbers at present. In the future, this advantage will shift to China, India & Brazil.

 

[strapped for cash]

Aside from economies of scale and varying national economic policies, within any free market capitalist system any non-essential product is only worth what consumers are willing to pay for it. If consumers believe an item is overpriced it will not sell, forcing amendments to pricing strategies among manufacturers, distributors, and retailers. It is never the case that prices can be rigidly imposed by manufacturers and retailers. Rather, pricing structures are under constant negotiation and consumers play an important role in this process. In short, if you don't think a product merits its price, don't buy it. If many consumers feel similarly this will ultimately produce a downward trend in pricing (in simple supply-demand economic terms).