Apple Australia Chief to Meet With MP Over Pricing Disparities

Friday August 19, 2011 11:55 AM PDT by Jordan Golson
Apple Australia managing director Tony King has agreed to speak with Australian Member of Parliament (MP) Ed Husic about technology prices that are significantly higher in Australia than the rest of the world.

Technology prices in general are much higher in Australia, even when accounting for exchange rates. The Australian Dollar is much stronger than it was two years ago, and now is trading higher than parity with the US Dollar. The new MacBook Air is 15% more expensive in Australia, and some software, like Adobe's CS5.5 Design Premium, is nearly 75% more expensive when accounting for currency exchange.


According to Australian newspaper The Age, King agreed in March to speak with Parliament by July 16. That date came and went without a meeting between the MP and Apple. Angered by this snub, Husic spoke strongly against Apple on the floor of Parliament:
Apple refused to respond and I am staggered by their behaviour: they've snubbed consumer, media and parliamentary interest in this matter.
He continued, saying that price discrimination occurs even when products are downloaded electronically -- such as from the Mac or iOS App Stores. Apple reduced app store pricing last month for a number of international countries to account for changes in exchange rates

Apple has gotten in touch with MP Husic and are reportedly trying to set up a meeting between him and Tony King. Husic said that if companies refuse to be transparent with their pricing, he would ask Australia's pricing watchdog, the ACCC, to "take up the case for long-suffering consumers and carry out a formal inquiry into why these prices differ so wildly."

However, Apple's Australian prices include a 10% Goods and Services tax. In the US, sales tax varies state-to-state and is calculated later in the process than Australia. As a result, the prices aren't as far apart, at least on hardware, as MP Husic claims. Additionally, exchange rates are constantly fluctuating and rapidly changing retail prices as currency rates change simply isn't feasible.

The problem is real, but it seems Husic may be singling out Apple because they are a big, successful company.

Top Rated Comments

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42 months ago
Australian's are being particularly cheated when it comes to song pricing:


The costs----------------------Album Pricing------------------Single Song Pricing
Australian iTunes Store:------US $23.92----------------------US $2.27 per song
USA iTunes Store:------------US $15.99----------------------US $1.29 per song
Amazon Music Store:---------US $12.99----------------------US $0.69 per song


For the same album in Australia you pay a mark up of almost 50%, for a single Australian's will pay an approximate 75% mark up. These figures are a lot greater than the 10% GST...
Rating: 8 Votes
42 months ago

Wow, amazing that you can tell the future, but lets go by the current facts: the AUD usually trades in the 75-85 cent range, and like most financial assets tends to revert to the mean. If you think that resources will stay high (which is what is driving the AUD at the moment, along with higher interest rates), then I have a bridge to sell you.

This is just more typical winging Australians. If you don't like the prices then don't buy the product. Apple has every right to charge whatever the market will bear. The problem isn't Apple but Australians willing to pay higher prices.

Australia is a small market with higher costs than the much larger and more efficient US market, and Apple has to offer a fixed price against a fluctuating exchange rate so not surprising things cost more in Aus. The alternatives: import from the US, buy something cheaper, or emigrate. You can't legislate lower prices.


I haven't read bigger BS than this in quite some time.
Rating: 7 Votes
42 months ago
It is easy to look at international pricing in a simplified current exchange rate situation.

Currency moves quite quickly especially the Australian dollar, which is reported to be, one of the most traded currencies in the world.
As such trying to set a price on any one point in time is rather difficult.
Companies who import products into Australia will often use currency hedging. Now this adds cost. But Apple in the US would also probably use hedging for their products so its a wash.

This means that they can set a price at a specific time and hold that price for a number of months.
Not only do they get the benefit of a set price, the consumer also benefits by knowing that this is the price they will pay for the foreseeable future.

Those in Australia and other parts of the world appreciate the issues we have with petrol/gas pricing where the price varies daily.

Specifically Apple Australia tends to set its price when a new model is introduced. They prefer to keep this price the same over the time period until the next model is introduced. Now you may not agree with this strategy but it is a valid strategy, and who wants to buy when next week the price may go up or down. Also every other manufacturer does the same so to single out one in the middle of a product cycle is a little unfair.

Headline prices are not always the price that you pay. In Australia there are often 10% discounts offered on Mac products. Stores like Myer, Dick Smith and others do this often.

As well if you buy iTunes cards from local retailers, like target and Woolworths you will sometimes get discounts up to 33%.

Likewise in the US where we are comparing the prices to hardware can be discounted at greater than 10%. This tends to reflect the higher level of competition amongst retailers in the US.

We all know in Australia that retail competition is not as severe as in the US. But the purpose of this discussion we need to keep things simple by comparing local recommended prices rather than street prices.

Why? As we are comparing the strategies of the manufacturer versus strategies of the retailer. Retail strategies are affected by local cost structures as indicated above by other posters.

In Australia the rents and costs of retail are much higher than in the US, so to blame the manufacturer for this part of the costs is not real. So let us compare the costs of buying some Apple products in Australia from the Apple Store compared to the costs of buying the same product from the US Apple Store. Other manufacturers products like Samsung HP Cisco and more can be sourced cheaper in the US.

We also need to factor into the equation the local taxes being charged.
At the end I would also like to compare the costs of buying products via iTunes/App Store in the 2 countries.

As others have already indicated the Australian dollar has been fluctuating quite rapidly. A few weeks ago it dropped to less than parity from being 10% better value than the US dollar.

For the purpose of this argument I have taken the dollar at this point in time is being $1.04 to the US $1.

Mac mini US start price $599 plus tax (local and state)
Mac mini US start price $699 inc tax


In the US the tax rate varies according to where you buy. And yes this creates a little issue when comparing. Buy in Oregon, and there is no sales tax, buy in California and its around 9% plus.

You could say most Ozzies will visit California - as its the airline gateway, and the tourist preference for many.

But lets use the average for most of the US as being around 7%

This gives the price as being
599x7% = 641.
641/1.04 = 616
699-616 = 83
or 12% cheaper
And if we are being truly fair to Apple the Australian 10% tax vs 7% tax means they are "overcharging" by around 10%

I chose the Macmini base model as it's differential rate in % terms is greater, and also its a newer product and its under the $1000 limit for importing GST free.

Arguments like freight costs are hard to factor in. The products originate in China. But then I am sure Apple US gets a cheaper freight rate than Apple Oz, but have no idea what this impact is.

Now this also does not include the costs of currency acquisition. If using PayPal it's generally going to cost around 3 to 4% for currency conversion. Using my 28┬░ MasterCard it's much less.

So the point being is 12% a rip-off of consumers. I guess that a personal view only an individual can consider.

In practical terms is this 12% saving obtainable should you wish to buy this overseas and shipped to Australia. Maybe if you are travelling to the US already it might be worth buying and saving 12%.

Personally I will be travelling to the US in the next few weeks and I have already rejected this idea on purely personal grounds. Why because I can purchase the Mac mini here GST free.

On the matter of iTunes purchases I have looked at buying iTunes cards in the US. The best discount I can find is around 10 to 15%. My latest purchase of iTunes cards here in Australia was $150 worth for $100 which is a significantly better discount. To me purchases from the iTunes Store are cheaper in Australia.

However buying books etc are far cheaper in the US. To blame Apple for this is incorrect. Local book publishers permit Apple to sell products based on a return that they dictate. The issue here was already decided by our federal government of which the MP discussed in the original post is part of, and local stores like Borders and Angus and Robertson been already affected.

I will still buy US iTunes cards purely to purchase books from the US store at a much cheaper rate, as well as Levi Jeans (50% plus saving)
Rating: 5 Votes
42 months ago

Wow, amazing that you can tell the future, but lets go by the current facts: the AUD usually trades in the 75-85 cent range, and like most financial assets tends to revert to the mean. If you think that resources will stay high (which is what is driving the AUD at the moment, along with higher interest rates), then I have a bridge to sell you.


As whingeing pom (we're, after all, the ones with the reputation for whingeing, I think), I have to disagree with you. Unless China decides to stop expanding, the Aussie dollar is not likely to do anything other than appreciate against the USD. Frankly, with something 'real' driving it's economy, Australia is probably in a better situation than most western markets to weather the current financial turmoil.

I imagine that you're right in saying that legislation will not protect the consumer, and that Apple can probably dictate whatever price it chooses for a market such as Australia. You miss though the point of the politician's exercise, which is that this is an exercise in politics, not legislation. By making so public a point, Mr. Husic raises the issue of 'unfair' pricing, choosing a popular (and therefore high-profile) target to make his point. Does this single out Apple? Of course. Does it therefore generate more attention? Naturally.
Rating: 5 Votes
42 months ago
Its not just Apple its all Technology companies that are taking advantage of us. (ripping us Aussies off)

One of my sisters friends got a camera that was $600AUD and in the US it was only $395USD. That's a big markup.

Something i would like to see is the ACCC step up and start looking into this.

Anther one is software that you download look at Toast 11 $179AUD in the US its $79.99USD that's a 50% market.
Rating: 5 Votes
42 months ago
We are not whinging people, but when some things are 75% more here, then you have a problem.
Rating: 4 Votes
42 months ago

Wow, amazing that you can tell the future, but lets go by the current facts: the AUD usually trades in the 75-85 cent range, and like most financial assets tends to revert to the mean. If you think that resources will stay high (which is what is driving the AUD at the moment, along with higher interest rates), then I have a bridge to sell you.

This is just more typical winging Australians. If you don't like the prices then don't buy the product. Apple has every right to charge whatever the market will bear. The problem isn't Apple but Australians willing to pay higher prices.

Australia is a small market with higher costs than the much larger and more efficient US market, and Apple has to offer a fixed price against a fluctuating exchange rate so not surprising things cost more in Aus. The alternatives: import from the US, buy something cheaper, or emigrate. You can't legislate lower prices.


Actually Australia is a huge market for Apple and technology in general as we have the most stable economy in the world. So when the US goes under again (which it will) we may end up being one of the highest buyers in the world.

Also the exchange rate should reflect the price. I can buy from a UK store and they reflect real time currency changes. Apples a bigger company just being slack.

And i wouldn't import from the US as the US imports from the same place we all do - CHINA!

Its actually cheaper to import the goods here then the US and less distance - so why does it cost more if we are all ordering and getting a delivery from the same place?

I'm sorry but cost of living in australia in general has become a joke and the technology industry need to lead a change in a stable economy instead of a dead one.
Rating: 4 Votes
42 months ago
Thumbs up if you read MP Husic as 'HP Music' :)
Rating: 4 Votes
42 months ago





The Aussie dollar is high when compared to the US dollar because the US politicians have to deal with the Tea Party wanting to block everything and downgrade the country's credit rating.

When all the tea bagers are voted out, things will change.

Aussies WANT their dollar to be lower, because higher means they sell less stuff!

.
Oh, dear. I don't give a rats about your yank politics at the moment, except that it will end up hurting everyone else, so here's a basic money hint for free.

The more you expand the amount of money in the system, be it by borrowing some (or a lot in your case) or by printing some aka Quantitative Easing (again, a lot in the US case) the price others are prepared for the USD using other currencies will fall. Hence the AUD is higher relative to the USD, despite uncertainty in commodity markets. It isn't the tea bagger crew that are pursuing and implementing those policies, but Obama.

But don't worry, the fall in the value of the USD is meant to be a feature, as it means your mind bogglingly massive debt is worth less too, and thus hurts all the people who lent your country money. Pity about the inevitable inflation that will come and bite you on your delicate bits eventually. You better hope it isn't stagflation, the inflation that happens when you don't have employment growth.
Rating: 4 Votes
42 months ago
I find it genuinely impressive that this MP is actually bothering to do something here. It's great. I'm not sure of the pricing situation in australia, but it's sounding rather unfair to the Australian people. The sole job of a Member of Parliament is to cater to and bring attention to the needs of his or her constituents, and I admire Mr. Husic for taking this rather large step - it sure beats the laissez-faire-I-don't-care-type MPs we're stuck with here in Canada.
Rating: 3 Votes

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