Apple states tax take on UK iPod pricing
You pay this, we take that, George Osborne gets the other, Eurocrats get the rest
Apple has made it explicitly clear how much more its charging UK consumers for its kit than US-based buyers.
The UK online Apple Store now states how much of a gadget's price goes to "VAT, duty and levies". VAT is obvious - it's our sales tax, overseas readers, billed at 17.5 per cent - and duty is the amount the European Union charges for imports of certain types of product - those with integrated FM radios, for example.
Apple's definition of 'levies' remains unclear - there's no explanation on the website, so we assume it's a catch-all for fees like those payable in some countries to compensate artists for the effects of copyright infringement.
The new iPod Nano on the Apple Store
Not that the UK has such a levy, last time we looked, though many other European nations do.
Apple states the 'extras' total is "an approximation. VAT, duty and levies may vary over time".
Back to the iPods. The new 8GB Nano, for example, is listed at £129, of which £25 goes to VAT, duty and levies, says Apple.
So that's £104 for the player itself, which is the equivalent of $161 at today's Sterling-Dollar exchange rate: £1 to $1.55. Apple charges $149 in the US - the equivalent of £97.
Now, Apple has to build in some flexibility to deal with fluctuating exchange rates, but the implicit rate of £1 to $1.43 in the £104 to $149 seems a tad conservative to us.
Bear in mind, too, that some but not all US buyers pay sales tax, and US prices are listed without this State-set extra. The highest is California's 8.25 per cent, though local taxes can push this higher, up to 11.5 per cent in some parts of Illinois.
Next page: Rip-off Britain
It's "Not having to live in the USA tax". Worth every penny ;)
Why is $1.44 conservative?
For a large chunk of May and a smaller chunk of June the pound traded in this range. It spent much of the first few months of 2009 in the range too, and has fluctuated sharply on several occasions this year.
It seems pretty natural for a company to price at the low end of the spectrum. Given Apple's products and business model are all about simplicity, I don't see them wanting to update prices weekly or monthly.
You may be on to something
The warranty issue might actually be worth considering. Unknown to many, the sales of goods act here in the UK gives you a 6 year warranty on the majority of computer gear.
Just last month I got a completely free repair on my company's 4-and-a-half year old (long out of warranty) Quantum DLT S4 tape drive from Quantum themselves. They initially fought me on it, but when I quoted the act and gave them a link to it (search on Google) they gave in and agreed to fix the unit for nothing! As far as I know if this unit had packed up in the states after the same length of time - or even if it died a day past a 1 year warranty - we would have been left with a 3 grand bill for a new drive.
Apple are full aware of the UK sales of goods act, a friend of mine got a free replacement on some old faulty Apple gear after quoting it to the manager of the Regent Street store.
You might want to tell the Swiss that they're an EU member. Last I checked they weren't aware of it.
Adobe is a far worse offender.
At the pound's peak of almost $2=1GBP a couple of years ago, Adobe were still selling Photoshop in the UK for 600 quid, while it was $640 or thereabouts in the US.
Quite a stunning mark up for basically a shiny disk. Makes Apple look fair in comparison.