UK vs US prices – why are we paying more for tech?
When our sister blog Which? Tech Daily set out to settle an argument about whether tech products in the UK really do cost more than those in the US, we weren’t surprised by the results. But why are we paying more?
Complaints about UK vs US price differences are nothing new – they usually come generously stamped with ‘rip-off Britain’ in bold red type. The standard defence is that US price tags aren’t all they seem to be, and that once you punch in state sales tax, prices are far more balanced.
They aren’t. Last week we went shopping; we looked at the price of five different tech products at five different shops; Currys, Comet and Amazon in the UK, and Best Buy and Amazon in the US. We included state and local taxes in our calculations and the numbers we came up with weren’t fun.
The average price difference between the cheapest price in the UK and the cheapest price in the US was a hefty 16%. One of the more mismatched prices was an Apple Macbook Air – an extra 21% in the UK, or £142 out of your pocket. You can see all the gory details over on our Which? Tech Daily blog.
Our survey wasn’t scientific – we looked at a limited range of products on just a single day, but the results were a conclusive indication that UK consumers are being asked to dig deeper into their pockets than their US counterparts.
Bargaining power, wages and getting business done
We’ve had a number of Which? Tech Daily readers wade in on why we’re paying more in the UK. A fairly sound argument suggested was that a larger customer base in the US means shops place bigger orders for products and so can negotiate a better price. It’s a reason the retailers themselves also give, but can bulk buying really save 21%?
Other common reasons given by UK retailers is our hefty 20% VAT rate; although with taxes in California (where we based our research) adding up to just over 12.1%, that’s a difference of 8%, not 21%. Companies also claim the cost of operating a business in the UK is higher.
Over on social news site Reddit, one commenter claimed the higher prices were down to the fact that UK pay packets are fatter than those in US. Our own policy advisor James Tallack agreed that wages are an important issue on product pricing:
‘Taking variations in disposable income – what you have left after tax – into account paints a more realistic picture of the relative cost of an item to someone actually living and earning in a particular country.’
However, James also pointed us to a study by financial services firm UBS that showed that not only are wages in the US comparatively higher, but that our cousins across the pond also have more purchasing power – they can buy more stuff. So perhaps they should be paying more for tech in America?
Yet, the most convincing argument I’ve seen came from commenter Topher, who said:
‘I think everyone has missed the point, and it is a very simple one. People who sell things, price them at what the market will bear.’
Is that it? Is the only reason we’re being charged £142 more for a Macbook Air because we’re actually willing to pay more?
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