This article is by Mark Gregory, a senior lecturer in Electrical and Computer Engineering at RMIT University. It was first published on The Conversation and is re-published here with permission.
analysis Australians are paying about twice as much as they should for a range of tech products including computers, software and digital downloads. It’s time for the government to act to bring this shameful situation to an end, to stop foreign multinationals from ripping us off. But until then, people should take steps to lower the cost of buying tech products. How? Read on.
The Australian consumer watchdog Choice made a submission to the Parliamentary Inquiry into IT Pricing last week. It found the cost of IT products to Australian consumers could not be justified and that price discrimination was a systemic problem.
The Choice report highlights that the high cost of IT products disadvantages all consumers and prevents Australian companies from competing in the digital economy. The flow-on effect was higher prices for everyone in Australia. Choice reported that for one product – Microsoft’s Visual Studio 2010 Ultimate with MSDN (New Subscription) – it would be cheaper to fly an employee to the US and back twice, and for this employee to purchase the product while overseas. The product’s retail monetary price difference is US$8,665.29 between Australia and the US.
Multinationals have argued that rental, labour and transportation costs, and the associated GST, cause the disparity. Another gem of a reason was the argument by foreign companies that Australia was a small market and therefore the cost of selling products here would be higher due to marketing costs.
The excuses are flimsy and transparently false. The Choice report states that these cumulative costs do not account for the doubling in prices for IT hardware and software. Digital downloads from some foreign multinationals are sold to Australians more than 50% higher than to US consumers.
Choice spokesman Matt Levey said: Global companies [are] pricing these products at a point where they think people are going to buy it, regardless if that’s at parity with other countries. They use a number of technological barriers to actually prevent Australians from accessing these products from parallel importing them and direct importing them from cheaper markets.
How to purchase directly from the USA
Many large US based online stores such as Lands End and L.L. Bean offer similar products to those available in Australia at quite amazing prices and provide international shipping. But some companies utilise a range of practices to prevent international customers from purchasing directly from the USA. The company might reject the purchase based on the shipping address, the type of credit card used or because your computer is located in Australia.
Other factors you need to check on before making an international purchase are whether the product will work here and if the warranty will be supported. To purchase directly from the USA it’s important to only use reputable mail forwarding companies and to read the fine print before any purchase. Mail forwarding has become a very competitive market so check competitor prices often. To purchase directly from the USA follow these steps:
- Register with a company that provides a USA address and mail forwarding. Examples are Shipito, MyUS, ForwardIt, and the Australian-based PriceUSA.
- Register with an international payment provider that provides purchase insurance, such as PayPal.
- If you wish to purchase on a site such as Ebay USA, set the USA address you have been provided with by the shipping company as your registered PayPal address and current shipping address.
Another hurdle to overcome is the use of geo blocking by websites such as Apple iTunes. Geo blocking is a recent move by global online stores to segment the world into markets and control access to products and pricing. A recent article by Dan Warne on Australian Business Traveller provides a step by step guide on how to create a US iTunes account in Australia. Unfortunatel,y if you also have an Australian iTunes account or sync over multiple devices, you may need to log out of one account and in to the other when carrying out updates or making purchases.
Another approach is to purchase US iTunes gift cards and have them shipped to you from the USA. You cannot use Australian iTunes gift cards (available from stores such as Coles and Woolworths) on the US iTunes website.
Why the Australian government has to act
I have written in the past about the mobile phone data plan rip-off and the international roaming rip-off. The common theme here is that international multinationals consider Australia to be affluent and therefore a target for overpricing. The Australian political mantra that free trade and low tariffs will be to the Australian consumer’s benefit is obviously not working. Choice’s three recommendations to combat international price discrimination are:
Educate consumers through government initiatives so people know their rights when shopping online – particularly in relation to returns and refunds, accessing legitimate parallel imports from foreign markets, as well as privacy and security; An investigation by the Federal Government into whether technological measures enabling suppliers to discriminate against Australian consumers, such as region-coding or identifying IP addresses, should continue to be allowed; and keep the low-value threshold (LVT) exemption for GST and duty on imported goods unchanged at A$1,000.
It seems Choice has advocated a softly-softly approach to solving the problem of high IT prices in the hope that the Australian government may take baby steps toward solving this problem. I fully support what Choice is advocating, but Australians need to demand more urgent and immediate steps to stop multinationals from price gouging.
Further Reading:
- Verizon Wireless vs Telstra: the great mobile rip-off continues
- Are Australian international roaming charges the greatest rip-off in history?
Mark Gregory does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations. This article was originally published at The Conversation. Read the original article.
Very interesting.
Have you considered how to reroute your steam connection to get access to the US steam site for purchases renai ?
Its quite easy once you know how. I can point you in a few directions if you cant find anything
You may wish to reconsider doing this now though, as of the latest revision of Steam’s EULA – they have stated that anyone masking their physical location to use another country’s store is breaking the terms and can have their account banned.
I have done this in the past, but probably wouldn’t anymore, don’t particularly want to risk 100+ games being taken away from me.
If you have purchased and paid for those games, they cannot legally take them away from you UNLESS they are willing to offer you a complete refund.
Good luck stopping them. Under the terms of most EULAs, you don’t actually “own” squat. You “licence” whatever you have paid for. And if you break the terms of the “licensing agreement” … you don’t own squat and they can easily revoke the licence.
Welcome to the new digital economy.
It would seem that one does just not simply ‘own games on steam’…
@Mater_T and Renai
Hence by penchant for buying physical media.
You don’t “own” anything you buy online these days unless it is shipped to you. You rent it semi-permanently…
In Soviet Russia, Games own you ?
lol….
Yeah and everywhere else, game STUDIO owns you…..
Resd the EULA that comes with your physical media sometime. No different to online media. You still don’t own the data, only the disc that the data comes on.
Ah yes tom…but how would they stop you from doing what you liked with the disc?…. :D
Two words: “Online verification” (of serial number).
Enough said.
Lol Renai- they’re crackable files + algorithms…hence Key-Gens :)
Besides, I was talking more old school games like Starcraft- didn’t even know what online Serials WERE then :D
I’ll stick with my physical media anyday- they’re not likely to stop me buying from a physical retailer if I give it to someone else because I’m done with it…..
Actually, EULAs can’t remove or restrict your statutory rights, and the recent ruling from the EU suggests that, at least in Europe, you own the games you have purchased digitally and can legally resell them, despite this being in direct violation of the terms in the EULA. This is a huge blow to electronic license agreements generally, and there’s hope that it could have repercussions globally (and may be extended to cover all software, eventually).
My account has an unlocked region code. I submitted an email to Valve and request this be done, due to my travels between Vodafone here, UK , NZ and Verizon USA.
Easy fix, took a grand total of 15 minutes and 3 emails.
All they wanted to see was multiple us / au addresses and IPs
I wish I had done this. Missed out on some super cheap stuff during the last big sale, as Steam won’t allow purchases from another country.
To be honest, almost all the prices on AAA titles were the same on both.
Prime (pardon the pun) example of this is ASUS’s new Transformer Infinity tablet. Pricing in Australia has been set at $999 for the 64Gb tablet and keyboard dock. Same unit is selling in the USA and Canada, including taking today’s exchange rate into account, for the equivalent of < $700USD.
Add $50 for shipping and insurance and you're still saving $250 at least !!
when I asked @ASUSAU for their comment on it, I was told that apart from "I don't control pricing", GST is to blame, and that I should feel free to purchase from overseas as the warranty is international.
@moldor
Indeed. Which is exactly why I am NOT buying the Infinity here. It is a disgraceful practice and seeing as ASUS provide international warranty, I will be buying it in Hong Kong most likely next week.
However, be aware anyone doing as such- your international warranty means it MUST be sent back to the country of purchase to be repaired as far as I know.
No, Asus’s international warranty means returning to your nearest authorised service centre. In fact, that’s what any international warranty should be, otherwise it’s not an international warranty, it’s just a standard local-region warranty.
“…this Warranty entitles You during the Warranty Period to international ASUS warranty service in Europe, North America (USA, Canada and Mexico), Asia, Africa and Australia/Oceania, subject to the following additional restrictions: ..
Service procedures may vary by country,
Some service and/or spare parts may not be available in all countries
Localized spare parts (e.g. keyboard/ keymats) may be replaced with the version customary in the country where the repair is requested.
Some countries may have fees and restrictions that apply at the time of service.
Certain countries may require additional documentation, such as proof of purchase or proof of proper importation, prior to performing International Warranty and Support
To enjoy the comprehensive international warranty service, visit ASUS Service Center website at http://support.asus.com/contact for detailed locations”
@Trevor
Fair enough.
ASUS is one of the few then. Olympus’ “International” warranty meant my best friend had to send her camera she’d bought from Greece back to Greece to be repaired….she didn’t bother and bought a new one even though it was less than 9 months old….
As I would, too.
I’m a little surprised that Olympus wouldn’t honour the warranty locally – I’ve had a lot to do with Olympus products in advanced optics and microscopes and they will usually bend over backwards to help, but then that division is a completely separate business entirely from consumer products.
Actually, in my experience it often pays to deliberately contact the wrong division of a company with warranty difficulties like this – go above the people you’re supposed to deal with and contact professional product support or head office and explain how disappointed you are with their brand generally and how damaging you consider it could be to their company, and you may get them to intervene on your behalf. I’ve had any number of products repaired outside technical warranty terms (for clients and personally) by (calmly and politely) following through with national support managers and head office executives. It’s amazing what you can get when you ask ;-)
Oh and yes, Asus are one of the few – their warranty terms are often better (longer, more comprehensive) than other products in similar price brackets and can often be the difference in a successful sale, in my experience. Massive kudos to them for this, and I sincerely hope other brands wake up and pay attention eventually.
Another example would be the Nexus 7. The 8GB and 16GB versions are consistently atleast $50 more expensive in Australia as compared to US.
Considering that the device itself only costs around $200 in the US, a $50 markup is a %25 increase in price for a single item. Moreover, the absolute bollocks around “expensive retail real estate”, warehouse storage etc doesn’t apply here. I recently bought a Nexus 7, paid approx $270 for something sold for $200 in US.
$250 price of device + $19.99 for shipping.
DickSmith is charging a whopping $319 per unit. What a freaking load of BS!
Seriously, to hell with these bastards!
Actually c1phertxt, the $50 markup is NOT a $50 markup.
The $200 quoted price for the Nexus in the US doesn’t include state taxes, which add anywhere between $17 and $34.
So it is, in fact, around a $30 markup. Once you take into account shipping over here, that is reasonable.
The point stands about other items, but not in the case of the Nexus for many outlets that are selling for $250 or maybe $10 more. It also stands for retail outlets like Dick Smith. But if you’re buying that sort of thing from Dick Smith you need help anyway :P
@seven_tech,
I paid shipping on top of the $250. Besides, they all ship from the same origin, i.e. SE Asia. If you buy it from Google Australia, it will ship from HK.
http://www.lifehacker.com.au/2012/06/ask-lh-why-does-the-nexus-7-tablet-cost-so-much-more-in-australia/
This is the justification given. The ‘tax’ argument is a bit of logic chopping. The argument as it relates to shipping is non-existent and misleading as you’re paying $20 on top of the $250 for shipping.
I rarely buy stuff from HN and DS. Customer service is absolutely appalling and nothing justifies the markup from those filthy scum. (I’m esp p/o’d at HN since I still haven’t received a game I bought at their epic fail sale in March).
@c1phertxt
No, the “tax” argument is not logic chopping. It’s logical. The US DON’T label their prices with state taxes applied. State taxes range from about 12% up to 22%. So, as I said the “actual” Nexus 7 price in the US will range, even from Google, from between $217 to $234.
That’s just tax. It’s not subversive or tricky. That’s just how it works.
Google absorb the shipping cost here, so they can charge $250 direct, because they have bulk shipping deals. Retailers who charge $260 say, may not.
Dick Smith’s charging is gouging. But a online retailer charging $260 is not. It is a small markup to cover individual shipping costs.
@seven_tech,
Fair enough. I agree the state taxes applied would mean a slightly lower differential. :)
That said, the shipping charges are irrelevant. I paid $250 + $20 (for shipping). Australians having to pay extra, negligible, but it is happening (~20ish going by your cost breakup).
————-
Perhaps Nexus 7 wasn’t the best example to demonstrate the issue. :P A $20 difference is chickenfeed compared to the price gouging done for things like books, software, computer hardware, electronics.
A $150 difference in price for a $500 ($650 in Aus) graphics card. Now that is appreciable. ;)
@c1phertxt
The Nexus isn’t the best example because of Google’s push for parity pricing globally to flood the market.
Graphics cards are a good example. Tablets too. SSD’s. Headphones…..
The list goes on….. :P
I was just about to mention enthusiast audio gear… back when I was getting into hi-fi audio, I paid $120 for a headphone that cost $40 in the US. Was so pissed off. :(
Now I tend to get stuff shipped from overseas using shipit.to (if US) or country-specific post. Always works out to be 10-20% cheaper. :)
——————
I do not believe that this price gouging is going to stop any time soon. Unfortunately, the “unaware” masses are plenty, and a lot of people CBF’d to buy from overseas unless the price difference is of “HOLY SH!T ZOMG!” proportion. This is a really unfortunate state of affairs. With the rise of better online retailers who have good distribution networks, things may improve. At the moment, certain key distributors have a stranglehold (reminds me of the mafia) on the import market as a result of which retailers and consumers are having to pay through their nose.
Opportunistic organisations like MS, Apple etc know a brilliant business model when they see one, and thus are “running a train” with Aussie consumer bent over and taken to brown-town.
gamekeys4u.net is good alternative to steam store, purchased Civ5 expansion from them $13, on official steam store its $50
I’ll throw in the Cirque Smart Cat PS2 touchpad (http://www.cirque.com/desktoptouchpad/productsandorders/smartcat.aspx) — US$59.95 plus UPS Worldwide Expedited [AU postcode] Shipping: US$96.99 (for a 1lb=454gm box) –> total: US$156.94.
That postage is a bit rough from where I stand. BUT, from The Cat Shop (http://www.thecatshop.com.au/): Smart Cat Touchpad (Serial & PS2) AU$145.00 but postage is free… this converts to ~ US$153.265.
Ummmm. Er… Aaaahhhh! I bet The Cat Shop is ordering one at a time and having it posted direct to my door?
Is this a rip-off?
Gordon.
@Gordon
The Cat Shop may very well be a grey importer and they are simply buying it retail from the US and doing exactly that- shipping it direct.
Many companies do this and manage to make a few dollars off every purchase through shipping discounts etc. It’s a response to customers wanting overseas products that aren’t even offered in the country, let alone at a decent price.
This is a different kettle of fish to what we see with most technology- it IS offered in Australia, but at a 30-80% premium even including shipping and transport and tax.
Yah.
Anyways, I’ve just ordered a touchpad from Ergonomic (http://www.ergonomictouchpad.com/xl_touchpad.php), US$59.95 plus US$8.00 shipping, AU$66.73 total.
Of course, we have to wait for it to arrive, but I’m not seriously expecting trouble as it went through PayPal.
In the meantime, it’s nice to see that not all US manufacturers are out to rob us.
Gordon.
It’s not just tech / digital downloads that are overpriced,
one that really grinds my gears is Cars and carparts how about adding them to the enquiries while thier at it the ex factory pricing to australia is even more obscene even taking into account the various tax’s
oh and add clothing to list aswell. Australia is a fantastic country to live but we do pay for the privillage
Steam tends to have most prices the same in Australia as in the US, but there are occasional (very big and obvious) exceptions.
Unfortunately, as long as publishers can tell distributors how much to charge and where they can sell Australians will continue to be ripped off.
One solution may be a government law allowing purchase from anywhere in the world, and if the product is (also) sold here then the imported item must be supported. That would leave companies supporting products that were tweaked for dozens of markets – maybe it’d wake them up. The other alternative is, of course, wide-spread concealing of your location via IP – but we again need laws confirming our right to use the purchased product.
The other solution is in the free trade agreements. Free trade agreements seem to be about the removing of import restrictions when they should also be about the removal export restriction. if you can stop manufactures putting export restriction on distris and resellers in markets we have Free Trade agreements with the pricing discrepancy will largely disappear.
@SMEMatt
We have FTA’s with the US……it hasn’t worked…..
Free Trade Agreements only work to the benefit of one country, America. America, the greatest threat to world harmony, constantly meddling in the politics and economics of every nation, for it’s own benefit. It sickens me how our sycophant politicians do anything the US tells them to.
Many thanks for the enlightening posting. What are your chosen consumer review internet sites?
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