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  • Enterprise IT, Featured, News - Written by on Tuesday, April 24, 2012 17:00 - 41 Comments

    Adobe’s biennial tradition: 50% Aussie price hikes

    news Global software giant Adobe has continued a long-running tradition of extensively marking up its prices for the Australian market, revealing yesterday that locals would pay up to $1,400 more for the exact same software when they buy the new version 6 of its Creative Suite platform compared to residents of the United States.

    The company issued a media release yesterday disclosing local recommended pricing for Creative Suite 6, which launches globally this week. However, as with the past two major releases of Creative Suite (version 4 and version 5, released in 2008 and 2010 respectively), Adobe has set its Australian pricing on average 52 percent higher for the full versions of its software.

    For example, the Design Standard version of CS6, which includes Photoshop, Illustrator and InDesign but not some of the more advanced tools, will set Australians back A$1,975, 52 percent more than the exact same software in the US, which costs just US$1,299 (A$1,265 at current conversion rates). It’s a similar situation when you look at Adobe’s Design Web & Premium and Production Premium bundles, which will cost Australians again, 52 percent more than Americans — a markup of about $1,000. And for Adobe’s Master Collection, which includes all of its tools, the cost is the same 52 percent markup writ large — a markup of $1,418 for exactly the same software.

    Articles chronicling the launches of Adobe CS4 and CS5 show that the software giant has been marking up prices for the past half-decade and beyond. Every two years, when Adobe releases a new version of Creative Suite, the cost is around 50 percent or more higher across the board for the same software when sold in Australia. The price hikes come despite the fact that it is possible for Australians to download Adobe’s software directly from its website, avoiding the need to go through local distributors and pay additional importation costs.

    In 2010, when Adobe revealed its CS5 pricing, the company’s senior director of APAC marketing Mark Phibbs pointed out that the majority of Adobe’s software in Australia was sold through channel partners — and so the prices listed on its online store may not reflect competitive pricing in the market. In fact, the price through its own online store would reflect a price towards the upper end of the range which its channel partners were charging.

    “We don’t want to undercut the entire channel in Australia,” the executive said, noting that if price parity in Adobe’s online store existed between Australia and the US, it would destroy the company’s local channel market. “The fact is, the channel is not as efficient in Australia as it is in the US,” he said.

    Asked what potential there was for Adobe to avoid selling through the channel and provide a more equal price direct to consumers, Phibbs said there was “some scope” for that, but stated also that many consumers wanted more of a complete package than could be bought through Adobe’s own store, which only sells its own software. In addition, at that stage Adobe stated the issue wasn’t one for the technology industry alone — claiming it was a wider problem affecting other areas such as the automotive sector as well.

    However, this line of reasoning may not buy Adobe much favour with the Federal Government, which has increasingly been signalling that it may investigate the issue of IT price hikes in Australia.
    A little over a week ago, Crikey reported that as a result of a campaign by Labor MP Ed Husic, the government is considering undertaking a Parliamentary inquiry into IT price differentials and legal options for preventing them.

    Husic has been constantly campaigning on the issue over the past year, and has raised it with a number of senior figures in government, such as Treasurer Wayne Swan. In October, Swan indicated the Government was keenly awaiting a report from the Productivity Commission which would detail the extent to which price hikes on imported technology goods and services were hurting Australian consumers.

    “While the [consumer pricing index] data showed that Australian prices for computing-related equipment declined in the quarter, we’re still paying more for some products than consumers in countries like the United States,” Swan wrote in an economic note at the time. “That’s why the Government has asked the Productivity Commission to review the extent of IT price discrimination in Australia. The Government expects to receive this report next month which will be one small step on the road to providing a better deal for consumers of IT-related products.”

    In the draft of that report published in August, the Productivity Commission had said it was aware of the “longstanding practice” by which some international product suppliers set regional prices which effectively treated consumers in one region as “willing, or able, to tolerate significantly higher prices than those in other countries”.

    Some suppliers, the Commisison said, had attempted to defend such price hikes by attributing them to the cost of supplying “a remote and relatively small market like Australia”. However, it added, “these arguments in most cases are not persuasive, especially in the case of downloaded music, software and videos, for example, where the costs of delivery to the customer are practically zero and uniform around the world”.

    opinion/analysis
    What a joke. Adobe has been consistently marking up Australian prices on its software for more than half a decade now (that we know of) and probably longer. I could partially understand the situation if the company was suffering increased local costs as a result of importing and distributing its software. But the fact that Australians are able to download the exact same software from its website as Americans are — but pay up to $1,400 more for the privilege of living in a different country — makes the distribution argument moot. There is no justification for a 52% markup across the board on the same software delivered from the same Internet site.

    Fair go, Adobe. Fair go. Your Australian prices are nothing short of disgusting.

    Image credit: Adobe

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    41 Comments

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    1. JimyKK
      Posted 24/04/2012 at 5:08 pm | Permalink |

      I am getting seriously sick of this Aussie tax (and Geo blocking) many American companies (with the help of Australian companies in some cases) force on us. The Internet is a GLOBAL communication system not a USA communication system

    2. Noddy
      Posted 24/04/2012 at 5:12 pm | Permalink |

      What markup are the local sellers putting on the product? What price do they get it from adobe for?

    3. Steve
      Posted 24/04/2012 at 5:14 pm | Permalink |

      You realise almost everything (cars, books, clothes, houses and nearly all services) are 50-100% more expensive in Australia than the United States. This is hardly something limited to software.

      • Noddy
        Posted 24/04/2012 at 5:20 pm | Permalink |

        I have experienced the car industry gouging in the extreme. Oxygen sensors. It’s typical for Australian dealers to charge around $1000 for two sensors. I ordered mine from the UK equivalent. In this case Vauxhaul as it was for a Holden. Identical part for the same car sold as a Vauxhaul in the UK. $170 including delivery. It would have probably been even cheaper if I bought it from Opel in Germany since they were Bosch.

      • Brendan
        Posted 24/04/2012 at 5:24 pm | Permalink |

        I guess at the moment, the ability download cars, clothes and houses is yet to materialise (see what I did there). In this case, it’s specifically relating to downloadable items which in all likelihood come from exactly the same system/source around the world.

        • Noddy
          Posted 24/04/2012 at 6:30 pm | Permalink |

          I would like to see the break down of the Australian selling price. I know that Adobe sells it downloadable at a higher price. It isn’t as simple as saying they could sell it cheaper though. Well, they could, but if 80-90% of your sales come from local sellers will may stocl a rival product instead if you undercut them you may think twice about doing it.
          I only discovered by accident how the retail break down of games. I just thought since we sold them at the same price to Australia as other countries the 90 dollar prices were extremely gready retailers. Little did I know how much the distributor was taking until a kindly EB employee provided me with there distributor price list and I could compare it to our wholesale price to the distributor and EBs retail price. The distributor made a lot of money for just importing and shipping. I mean a lot. Something we sold for 40 EB got for 80 and sold for 90, that’s 40 to the distributor, for what? Signing shipping documents?

          • Justin
            Posted 25/04/2012 at 11:34 pm | Permalink |

            From one particularly large distributor the wholesale price for the suites is about 22% less than the RRP making the wholesale price to retailers about 22% more than RRP in the US. Presumably it’s a little better if you buy in volume.

          • PeterA
            Posted 26/04/2012 at 11:59 am | Permalink |

            That’s what it comes down to. Bad contracts with distributors.

            How is that the customers fault? Drop your local distribution, and ship it to customers by post. Cheaper than 40 dollars if you are a big market.

            Sign a distribution contract with EB, they would jump at the chance to make 20 dollars profit instead of 10, AND get to undercut your other distributor.

            Seriously; it isn’t hard. Getting screwed by your distributor? Then, use a competitor! There is clearly too many middle-men. This is what the market is supposed to do, *increase efficiency*, not grin and bear it.

    4. Posted 24/04/2012 at 7:07 pm | Permalink |

      Lets be realistic: when it comes to Adobe there is no rival product. There are free alternatives, but no rival. Same goes with MS Windows – you can’t buy OSX and just run it on a PC.

      This is just blatent profiteering. But it isn’t illegal. The price is being set by the vendor & distributor at the highest value the market will support. The price isn’t the result of collusion, export duties, high aussie taxes, or anything else we reasonably object to. It is just expensive.

      And when it comes to western economic and political theory – this is exactly the result a free market / free trade economy idolises. They have developed a great product and sell it for a fortune. It is very difficult to criticise Adobe and maintain the moral highground, and even harder to establish a policy & law restricting their behaviour without a principled foundation.

      Don’t get me wrong, I don’t think Adobe / MS are doing the right thing, but new laws aren’t the answer (unless someone can suggest a principled foundation to base them on). Consumers should exert market pressure to drive the price down. Find alternatives to buying from Australia.

      • SMEMatt
        Posted 26/04/2012 at 10:34 am | Permalink |

        Actually it is the result of artificially restricted trade. It isn’t being restricted by governments but by adobe themselves(and other similar companies). The restrict retailers and distributors in countries where they can get away with it from selling outside their market. It is the reason why you have to dig around a bit to be able to buy these goods from overseas.

        Australia despite being more regulated is generally a more open market than the US(with some exception) the difference while the US forgoes regulation as much as possible Australia tends to regulate to prevent abuses of market share. The best way forward is for Australia and other affected countries to pressure to the EU to outlaw such practices in there territories(not likely as the EU has other problems) or the US which might be possible while big corporate businesses wields a lot of power in the US government outlawing such actions in the US would open up the global market to a lot of smaller(and larger) American distributors and retailers which would boost exports and create jobs at the expense of the foreign arms of the multinationals.

        When the Australian wholesale price of goods is greater than the US or UK retails price shipped to Australia, there is a market failure.

        BTW Adobe who does the channel buy from? Thought so.

        • Justin
          Posted 26/04/2012 at 10:56 am | Permalink |

          What was it we were getting out of those Free Trade Agreements again?

          • Bern
            Posted 26/04/2012 at 5:38 pm | Permalink |

            A conveniently-placed handle so we’ve got something to hang on to when we’re forced to bend over…

    5. Mark
      Posted 24/04/2012 at 7:54 pm | Permalink |

      Great article. The more attention that is bought to these ripoff merchants the better.

    6. Magnus
      Posted 24/04/2012 at 8:23 pm | Permalink |

      Are there any restrictions in place if you use a US purchased version of the software in Australia?

      • Brendan
        Posted 24/04/2012 at 8:25 pm | Permalink |

        I don’t think there’s restrictions of using the software from the US in AU, but to purchase off of the US Store, you need to have a US address…which is not in itself a hard thing to get around, just a PITA. I’ve heard you may also need a US based credit card too as the billing address may be used for authentication.

        • SMEMatt
          Posted 26/04/2012 at 10:49 am | Permalink |

          Yes a number of companies in the US with high demand products will withdraw access to products to businesses found selling out there market. Adobe do this, pretty sure Microsoft do this, Game Workshop do this Electronics Arts I’m pretty sure do this, I’m certain Fender did this in past and may still be doing this, a number of the ever popular MPAA members do this, Hasbro do this. Some companies have gone so far as to withdraw access to goods to business who have been found to be buying from overseas suppliers.

          They can’t do the former in Australia but the latter does happen although I doubt any supplier would want to challenge the likes of JB hifi, Harvey Norman, or Woolies(DSE power house and the like) on this issue as being withdrawn from their store would see you lose a lot of market share.

          Free trade to big business means I should be free to restrict what ever I want.

      • PeterA
        Posted 26/04/2012 at 12:03 pm | Permalink |

        No restrictions on “US” purchased CS5 vs AU.

        I purchased 2 copies of CS5 for work last year for ~2000 dollars total savings.

        They even emailed me the CD Keys (I asked specifically for them to do this, I understood the risks, they also shipped the boxes).

        End result; I had my “product” (cd key) delivered to my door within hours of purchase, for 2 thousand dollars in savings.

        I purchased it from one of those Ebay Shops. Not a random ebay seller. Couldn’t have been happier.

    7. Steven
      Posted 24/04/2012 at 8:56 pm | Permalink |

      Autodesk, the makers of AutoCAD, Inventor, Maya, etc are even worse. Typical prices are 210% compared to USA/Canadian pricing, and their licencing prohibits usage outside the country of distribution. Nothing like being ripped off just for being Australia. F@#k’em.

      • Justin
        Posted 25/04/2012 at 5:10 pm | Permalink |

        “Autodesk, the makers of AutoCAD, Inventor, Maya, etc are even worse. Typical prices are 210% compared to USA/Canadian pricing, and their licencing prohibits usage outside the country of distribution. ”

        Some might call that piracy.

    8. Nich
      Posted 25/04/2012 at 2:36 am | Permalink |

      The irony is that it’s probably cheaper to fly to the US to bypass the geolocation BS to purchase/download Adobe’s high-end suites.

      And, as always, what we really need are the wholesale prices of Adobe software. Which won’t be forthcoming. I suspect that even if they matched the US price for AU downloads, local channel partners would still have a lot of wriggle room to make a profit.

      • AJ
        Posted 25/04/2012 at 10:10 am | Permalink |

        Sounds like a good idea you get the software AND a holiday for the price of buying it here

        • SMEMatt
          Posted 26/04/2012 at 12:33 pm | Permalink |

          Wonder if I can convince my accountant to do this when we need to upgrade to CS6.
          ATM 3 x Design Standards CS5.5 licenses and I think I will need to add a production premium license and upgrade one of those standard licenses to Premium.

          So 3 upgrades and new Production premium license cost save might be more that a US trip maybe I can schedule it around NAB exhibition in Vegas.

    9. Simon
      Posted 25/04/2012 at 8:36 pm | Permalink |

      Big deal. We know all this. These are the people who are members of the BSA. Their ex VP of anti-piracy is now the US Attorney who indicted Megaupload. The BSA is the software version of the MPAA. Looks like their software arm is making some juicy profits, whilst their entertainment arm is getting hammered. Democrat by the way.

    10. dartigen
      Posted 25/04/2012 at 10:35 pm | Permalink |

      Australia has always paid slightly more for everything – physically, we’re a loooong way from many countries, and shipping costs money because ships need fuel and staff and that all costs money. Economically, exchange rates mess with everything.

      But 52% markup? Pull the other one, Adobe, it’s got bells on it.

      • Justin
        Posted 26/04/2012 at 12:04 am | Permalink |

        It’s a downloadable product. There is no shipping.

    11. gary
      Posted 26/04/2012 at 2:08 am | Permalink |

      Why use Adobe at all? Isn’t there an alternative commercial or open-source alternative?
      A friend of mine who develops websites goes out of his way not to use Adobe products, finding them over priced and over rated.

      • Justin
        Posted 26/04/2012 at 9:43 am | Permalink |

        To Photoshop? Not really. Illustrator and InDesign? I’m not sure. I haven’t seen any but can’t say I’ve looked. I imagine for most in the graphic design and photography arena they all have skills in Adobe’s range and the effort to retrain is probably too high.

      • Brendan
        Posted 26/04/2012 at 9:49 am | Permalink |

        There’s also the problem with exhanging files with others in the industry cleanly without the possibility of something not quite working 100%. There once was an alternative to Illustrator called Freehand (which I still use), but unfortunately Adobe bought Macromedia and then slowly dropped support, then the app itself.

    12. Douglas
      Posted 26/04/2012 at 10:06 am | Permalink |

      Not sure how you price your advertising Renai, but most commercial entities follow a principle of “charge what the market will bear”.

      This means to sell your goods at the highest price you can in any given market. If you pump up the price too much, then people will stop buying. People haven’t stopped buying…

      If Australians continue to buy Adobe (or any product) for that matter at a higher price than people in the US are paying, why on earth would Adobe reduce the price?

      If you had more people after advertising than you had space, would you reduce the price you charge for advertising? You seem like an intelligent guy, so I suspect not.

      I know that might sound like cold hearted capitalism, but it’s just the way of the world, IMHO. Put’s food on all our tables.

      Regards,
      Douglas

      • Justin
        Posted 26/04/2012 at 10:12 am | Permalink |

        That’s not really an appropriate comparison. There’s no limit to supply for Adobe. Also, many are doing what you’ve suggested, they’re simply not buying it. Or, they purchase it direct from the US.

        • Douglas
          Posted 26/04/2012 at 10:18 am | Permalink |

          Hi Justin,

          Maybe that was a bad analogy, you are right.

          However, the original question still stands, if people keep buying it at the price they have set, why would they (Adobe) reduce the price?

          This is the basis for a free market.

          If you think that this is wrong, then I’m afraid you may have been to one too many communist meetings ;)

          Regards,
          Douglas.

          • Justin
            Posted 26/04/2012 at 10:27 am | Permalink |

            I understand and agree with that. I don’t agree with regionalising the market in this manner. It’s a global market, they take advantage of this from the input level and we expect them to do this on the output level. If they don’t, I don’t accept them whining that you’re a pirate if you buy the tool outside your region. I’m not sure if Adobe do, but they certainly try to make it difficult for you to do it.

            • Douglas
              Posted 26/04/2012 at 11:01 am | Permalink |

              Hi Justin,

              I respect what you are saying, but disagree.

              Australian wages are substantially higher than in the US*, so I don’t have a problem with us paying more.

              I would hope though (and I don’t know the answer to this) that Adobe would also continue to follow this logic and make the product cheaper in countries with lower wages, like Thailand for example.

              If they don’t, then that is a problem.

              Anyway, that’s enough from me on this topic, back to work like a good little capitalist! :)

              Have a great day.

              Regards,
              Douglas

              *Salary source: PayScale Inc.

              • PeterA
                Posted 26/04/2012 at 12:14 pm | Permalink |

                Pays may be higher; but cost of living in the USA is also lower.

                according to some random page I found by googling, our CPI indicates we are ~20 percent more expensive than the USA.

                Are we paid 20 percent more than the USA? Wikipedia implies we have ~20% less disposable income (on average) than the US.

                Still not seeing how we should be paying ~50% more than the US on products of a digital nature. (indeed shipping and shelf-space don’t really explain our cost premium even on physical products).

              • Justin
                Posted 26/04/2012 at 12:25 pm | Permalink |

                Median/Average pays aren’t really a good indicator given that the product is primarily targeted at business and professionals.

                • Alex
                  Posted 26/04/2012 at 1:06 pm | Permalink |

                  If ability to pay is a legitimate criteria, wouldn’t that then rationally equate to the rich Australian should be paying more for “everything” than the poor Australian, because his/her income is substantially higher?

            • Alex
              Posted 26/04/2012 at 1:20 pm | Permalink |

              Exactly Justin.

              Multi-national companies generally (not Adobe per se`) want it both ways, but it always favours them, surprise, surprise.

              They on the one hand, want to be part of a “one/global economy”, so as to be able to outsource low labor costs, whilst still having the ability to non-globally set prices for each separate market, to maximise their own greedy profits…

              Just like prior to the GFC, they wanted governments to keep their noses out of their businesses (we aint commies). But as soon as the shit hit the fan, because of their own greedy excesses, they went cap-in-hand, on their knees, begging the very same governments to intervene and save them…

              Fucking grubs.

    13. Campbell
      Posted 27/04/2012 at 9:45 am | Permalink |

      When will the world wake up finally and agree the internet does not belong to the US and US Corporations. Sure they invented it but the US’s attempts to control it globally will always fail. Afterall the inernet was a product of US Military research and designed not to be controlled in the first place. The extradition of Dotcom to the US wil fail. He is protected by legislation in the US absolving service providers of what the users upload. The so called money laundering is to beef up the case. A judge revealed the cased may never go ahead in the US. I dont think the NZ crown will be able to prove in court that he has done anything wrong. He was guilty until proven innocent. NZ Polce were stupid in condcuting a 70 man raid on a dude with suspected copyright violation. I dont think the US government used more that 30 to bag Bin Ladin. It was done to make out that Dotcom was a massive criminal at the behest of the FBI on a par with a freken drug cartel king pin. The whole thing reaks of scare tacttics by the US Government make an example of Dotcom.

    14. Kym
      Posted 02/05/2012 at 12:26 am | Permalink |

      It’s no wonder Australians are becoming some of the most prolific piraters of both software and multimedia in the world…. nuff said.

    15. Tex Mex
      Posted 02/05/2012 at 9:35 am | Permalink |

      The pirating argument is reasonable. If prices were lower it might lower piracy. I know personally with music being significantly higher in the AU than the US iTunes store has discouraged purchases I would have made. (not that pirating is justified in this case) In countries that for example provided cheap online TV/movies, piracy dramatically dropped. Adobe may make more over money by reducing the price and work on the principle of selling bulk rather than a few at a higher cost, getting those on the piracy border. (they probably could not be bothered because we are small)

      However, this is also the flaw and beauty of capitalism. If you regulate, you stifle and if you ignore you are abused. However Adobe are not justified in these costs.

      Fact is Aussies are ripped off with online content.

    16. midspace
      Posted 04/05/2012 at 11:41 am | Permalink |

      Recent article about which countries are on the U.S. IP watch list.
      http://www.itnews.com.au/News/299348,us-fingers-priority-ip-abusing-nations.aspx

      Australia isn’t one of them, so how much is piracy a justification for having high prices?




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