What do you mean WHY is Sony PS4 so pricey in Oz? You'd think that Guardianistas would know something about capitalism: they are so critical of it after all. But no, in the G's new Oz site we find the same gormless no-cluebat ignorance that we get in our own dear and beloved home version of the paper. To quote the Down Under edition: Why is the PS4 so expensive in Australia …
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>> > "You wouldn't be caught dead with that muck down under. You'd be turned away from the barbie if you turned up with a six pack of Fosters mate!"
>"So to summarise: Australians don't mind selling piss water to other countries, but complain when they themselves get screwed over. Oh well."
I seem to remember when Fosters was first around, it was imported and (at least to my adolescent tastes buds) better than the later non-imported version.
'Brewed in the UK under licence....' typically seems to indicate something a step or two worse than the original product, whether that product was good or bad.
"And I think The Guardian's point might be that it's not a good reason. Just a thought."
Problem with a 'good reason' is that it differs from entity to entity. To Sony a good reason is because the market will bear it. To the Guardian, a good reason is any story that sells more papers. To the consumer a good reason is a low price.
When deal with morals or what is 'good' or 'bad', it is entirely dependent on your viewpoint and your position in the transaction.
"And I think The Guardian's point might be that it's not a good reason. Just a thought."
And I think El Reg's point was that it is a good reason for Sony, regardless of how outraged it might make the journos at the Graun. As a business, Sony's raison d'être is to make as much money as they possibly can.
You have hit the nail on the head. Big business likes the free market, but only as long as it favours them. If it starts to favour the consumer then they get their tame politicians to introduce artificial constraints on trade.
Or introduce their own constraints (such as region coding) and then get those same bought-and-paid-for politicians to back it up with draconian law (DMCA, for example).
>>"You have hit the nail on the head. Big business likes the free market, but only as long as it favours them. If it starts to favour the consumer then they get their tame politicians to introduce artificial constraints on trade."
That does rather depend what version of 'freedom' you choose to consider the definitive one, something which, despite appeals to 'principles' will, for most people*, be likely to include a meaningful element of personal bias.
(I'm not excluding myself here, though I do try and avoid claiming 'principles' as if they were some sacred standalone things when in fact they seem to largely be post-hoc generalisations attempting to support one or other person's particular opinions at a particular point in time.)
Unless they're abusing a monopoly on something people actually *need*, rather than on some non-essential luxuries, why should a company not be 'free' to make calculations for any particular market about expected returns at various prices and choose prices accordingly, leaving consumers 'free' to choose whether to buy the product or not?
If a company was making perfume which was sold in the UK expecting to go for ~£50/bottle, why should they not be free to sell it cheaply enough in Colombia to retail for $10/bottle in Bogota if they can make extra money doing that, and free to refuse to supply Colombian wholesalers who were going to export it?
It's not as if anyone actually needs expensive perfume, or that there aren't other perfumes around, and if a meaningful amount of the perceived value in the UK comes from expensive advertising, why should the company let someone else make money on the back of advertising they haven't paid for?
If something is a luxury and perceived to be a rip-off, then people should:
a) not buy it
b) make it known why they haven't bought it
If the people are sufficient in number, that may get taken into account in future pricing decisions.
Pretty obviously, just doing something like buying a games machine for a little less from elsewhere isn't actually likely to make manufacturers see much need to change to equal pricing even if they're aware of it happening, since they still made decent money from the complainer as well as making money from the rest of their purchasing countryfolk at the higher price, and so dropping the higher price would necessarily have involved making less money.
If I don't have a monopoly on some essential products or services, why should I not be allowed to choose who I sell them to, and at what price, based on whatever criteria I choose, as long as I don't fall foul of discrimination laws?
> If I don't have a monopoly on some essential products or services, why should I not be allowed to choose who I sell them to, and at what price, based on whatever criteria I choose, as long as I don't fall foul of discrimination laws?
You're talking about choice though.
The grey import laws are about reducing choice.
It's a long reply, but I think you missed the target by a mile. If a company wants to charge different prices for their products in different regions, they're free to do so. That's free-market economics. The poster's point was that in a global market, that only works if the law intervenes to prevent competition from setting a market rate for the product by allowing importation by others. That's really a step too far for a lot of people, including me.
USA$399 ~ UK£254
Add 20% and that gives us an on-the-street price of about UK£305. I don't think anyone would moan about a few pounds here or there (transport costs, slightly different regs etc). But £45 (13%)?
In the past I have bought bike parts from the USA for a Japanese bike. Including courier and import duties it still works out about 33% cheaper. Madness. Utter madness.
And why does it happen? Grey imports are often blocked at the EU level. Competition and free trade are not permitted.
There's also the nuances around EU warranties too. The US tends to get a bit of a raw deal when it comes to warranty periods (I think it's less than a year?), whereas the EU gets 2 years. The UK gets the convoluted 6 year version too, but a lot harder to prove.
This instantly increases the cost to global manufacturers
US warranties for the majority of things I have owned are 30-90 days(unless you purchase a ripoff service contract). Some companies like Nintendo give longer if you register(I think its 6 months).
Its always amazing how many times something will break down like 2 days after the warranty is up.
Sony usually gives you a year.
At least the Warranty on my Vaio was a year and IIRC the PS3 was also a year. They didn't give me any shit when I had to replace my LCD in the laptop twice either, which was nice compared to the hoops Id had to jump through with HP a couple of years before.
I did buy both products from a Post Exchange though, and their warranty may be different for the Armed Forces than for the general public.
The warranty issue is a major red-herring.
Seriously, how many consoles fail in the second year?
If it were a lot, the manufacturers would deserve a good beating. My Core2 has lasted for years with a very hot graphics card inside in a room which hits 38C regularly in summer. If consoles, which normally sit under the telly in the most temperature-controlled room of the house can't last that long then there is something wrong with QC.
I simply don't believe it.
It goes beyond VAT, theres also possible import duties and as others have mentioned warranty \ support costs and volume. Plus then they round to the next highest 'pretty' number. Plus there is the issue of American consoles being subsidised by other markets due to it's size, i.e. win the american market and win the world (if it makes you feel better drug pricing is the other way round, the American health system subsidises the rest of the worlds drug r&d).
If you don't like the price don't buy it. It's a luxury, you don't need one. If it doesn't sell at the release price they will drop the price. If it does and you think it's too expensive then it isn't for you. They price by region differently because theres some cost difference but also because they can, and they can because people let them. They complain about it being expensive or price inequalities but enough still buy one. Capitalism works both ways, if you want to change it, don't buy one until it hits a price you think is fair or buy a different console. If it sells like a steaming turd you can bet they will change the pricing. If it sells like a cookie at glastonbury do you think they will change anything?
When you're dealing with basics that everyone needs, there might be some point to the story. When dealing with luxury items, the answers simple. If you want it and are willing to pay that price, buy it. If you're not, don't. Nobody has the right to a product at the the price they're willing to pay. Of course, there is an alternative. Move to where it's cheaper, but I suspect that will be more expensive.
If you don't buy the console at this price, Sony will quickly reduce the price or decide they don't care about the Australian market.
Yet they probably won't have a real debate about selling more at the correct price. They'll just assume they're making more money by gouging the Australian people.
There IS NO "the correct price" you idiot. That's the whole bloody point. Even if there were, it wouldn't be the same price everywhere... if you sell it for $500 everywhere then it is cheaper for people in countries with higher salaries, that's not fair for people in poor countries...
@JDX
It's got nothing to do with fairness. If a company is selling its product at a rock bottom price in some poor country then that price is usually the bare minimum the product can be sold for whilst still making a profit for the company. There are some complications such as poorer countries having lower standards of consumer protection so money can be saved on warranties as well things like lower distribution costs. Overall though it's rare that a company sells its product at a loss in a poor country simply to gain some market penetration / brand awareness / do the poor buggers a favour. My point is, if you're paying extra in a rich country most of that extra cash is pure profit to the company and they charge it simply because the market will bear it.
@Mad Mike
I'm inclined to agree with most of what you said. However, I don't think people should be forced to move to where luxury items are sold for less. They should be able to buy their goods from regions where the products are sold at a lower price. More specifically, resellers should be able to source goods from regions with the lowest price without being hindered by artificial trade barriers (i.e. grey-import bans).
I'm not sure that you can say its logical to suggest that there is "no correct price" and then suggest that selling at the same price everywhere is "unfair" to poor people.
The point is that companies have to operate within the law. It would be quite easy to fix the problem. You just make companies honour transferable warranties on kit bought anywhere and don't give governmental protection to official vendor channels.
>>"The problem is this:- it will sell."
Then the 'problem' is really that not enough other people decided a product is overpriced enough to be worth avoiding. Or in other words, the 'problem' is that the opinions of the majority outweigh the opinions of the few
>>"Yet they probably won't have a real debate about selling more at the correct price."
The 'correct' price is whatever they choose to sell it for, not what you want it to be sold for. It's their product, not yours.
They may not be 'fair', but that is their prerogative.
And why would they want to have a debate with a bunch of Kevins?
I've spent a bit of time in Oz, and the raw "Charge what you can, whenever you can get away with it" runs the range from luxuries to necessities.
Funny how petrol prices (and just about everything else connected to them) rise significantly around the holidays when everyone is gallivanting about on family visits and the like. Rent? You'd think you'd get solid gold taps for what is charged down under. Etc.
And funnily enough the few politicos who do try to impose limits on this behaviour get shouted down by the people who complain the hardest about the cost of living in Oz. Funny old country....
Yup. Apple charge over the odds for the iPhone down under, but there's no "Australia tax" on unloved landfill Android devices. They've worked out that Australians are willing (and able) to pay more for premium products.
Thanks to your higher wages you still end up better off. Whinging Aussies....
Thanks to your higher wages you still end up better off. Whinging Aussies....
Though a commentator on a business program I listened to recently pointed out that after around 20 years of uniterrupted growth along with the accompanying rise in living standards and expectations then Australian had started to reach the point where it was pricing itself out of the market!
Don't believe the higher wage dribble. All the costs are higher too. The only thing you should compare across countries is post-tax disposable income. On that basis I don't think you'll find we're as wealthy as the media likes to make out. Having a minimum wage of around $20/hr just puts a floor under the unit price of labour. Sure it raises incomes as the pollies like to trumpet, but it doesn't exactly hold back prices.
As one example of uncontrolled costs that should exclude labour, I found electricity unit price in the UK (inc VAT) of 13.42p (~22c). I currently pay 23c inclusive of GST but that will be rising to 28c in 2 weeks. Not exactly a bargain when you think of all the natural resources we have versus the UK importing energy.
Don't even bother with the price of beer. A pint, where you can buy one, will cost you around £5.20-5.80. That's more than I paid in the nicer parts of London not long ago.
Cars? Nope. Cannot parallel import.
Computer kit? Nope. Pricier in general.
Household appliances? Pricier.
....
$399 -> A$440 -> A$484 including 10% sales tax.
+ Warrantly is probably longer (is it 2 years over there?)
+ Cost of doing business in Australia (and providing PS+ and PSN to users in Australia), including distribution in a sparsely populated vast landmass
+ Currency fluctuation buffer
+ Greed (including rounding up to nearest $50)
= A$549
The crossbone is 25% more expensive than the PS4 in the states, but in Australia it's less than 10% more expensive than the PS4. That dealbreaking $100USD difference is instead a mere $50AUD difference. It's all a bit silly really. Hope the rumours about the PS4 being region-free are true.
+ Warrantly is probably longer (is it 2 years over there?)
This shouldn't be a large factor - most tech will follow a 'bathtub failure curve', meaning that ther will be a number of 'burn-in' failures in a short period (well within the statutory warranty period whatever it is), followed by a slow increase in 'burn-out' failures. The length of the warranty period beyond the 'burn-in' period should have little effect on this, unless the ongoing failure rateis very high (a-la Microsoft's 50% Xbox failure rate) in which case teh suplier would probably replace them as a matter of goodwill rather than face pillory from the public anyway.
+ Cost of doing business in Australia (and providing PS+ and PSN to users in Australia), including distribution in a sparsely populated vast landmass
As noted elsewhere, the devices are manuafactured largely in SE asia, to which the Australian landmass is substantially closer than the US and Europe. In other words, shipping costs to Aus should be LESS not MORE. Distribution costs across Aus might be higher, but as I understand it, most people there live in a small number of cities on the coast, so prices there should be no higher as a result.
+ Currency fluctuation buffer
If anything, the Australian dollar appears to be gaining against other currencies; shouldn;t this buffer be negative in this case?
+ Greed (including rounding up to nearest $50)
This is, I tihnk, the most likely explanation. Given that goods are priced higher in Aus, everyone who wants to make money will keep selling them at higher prices. This is called capitalism.
US$399 = AU$416 at the time you wrote this. Warranty is one year.
"Cost of doing business in Australia (and providing PS+ and PSN to users in Australia), including distribution in a sparsely populated vast landmass."
Complete load of bollocks. Australia is closer to China (where the PS4 is made) than the USA is to China. Shipping costs are thus cheaper. Ninety-nine percent of Australia's population is located in a few major capital cities with a population density on a par with any major US capital.Nobody lives in the 'vast landmass' because it is mostly a desert.
The parts you got right are greed and the GST (10% sales tax).
I wouldn't count on well just because we can being a valid reason for the tax. By no means an expert but fairly sure the various WTO treaties Australia has signed would prohibit it.
That's the sort of action which cod trigger some form of trade war which I wouldn't imagine is in the interest of the average Australian despite the amount of price gouging they suffer.
It always amuses me when people moan about ryanair/easyjet etc. They would rapidly go out of business if no one flew yet everyone lines up whilst grumbling about fee's, extreme upsell etc.
If you do not like these things then do not buy them. Capitalism's main redeeming feature is it allows a kind of market democracy. People moan about a new Tesco/Wallmart opening and "destroying the High Street / Main Street" put if the local populous refused to shop there it would be closed down.
If you object to higher AU prices do not buy the product, a PS4 is not an essential product.
Ryanair and Easyjet have a captive market in most places; there is a significant investment barrier to competition, so they are the only show in town for cheap flights between a number of airports. For example Ryanair fly Bristol to Dublin, their only competition is from Aer Lingus. As long as Ryanair keep their flights £1 cheaper than Aer Lingus, they will get the business. This both drives up the price Ryanair can charge, and drives down the price Aer Lingus can charge, until they reach an equilibrium and both start increasing their prices ins tep. As long as they don't collude in this, then there is no cartel pricing, and the consumer keeps paying more. Whilst this is good for Ryanair et al, it is not for the consumer.
Excepting for the slight issue of Ryanair trying to buy Aer Lingus. If this happens and I am still contracting in Dublin, I will be looking at BA flights back and forth... or take the train to Belfast and take an EasyJet flight to Gatwick to go home.
I could even call into Portadown to have a pint with a friend before continuing on to Belfast International.
There is always an option (short of heading to Antarctica or outer Mongolia) . They may not be in the same price range but if that is the case the point still remains. People seem to think they have to just accept things (i don't vote they are all the same etc) but when dealing with businesses you vote with your feet. I used to fly between Brussels and the UK often, a colleague would take Ryainair and moan constantly about the experience yet when i suggest he flew with Brussels Airlines (which i did) he refused as the cost was 3 times more. Pay your money take your choice.
Ryanair is a prime example as they do everything they can to court publicity negative or otherwise. This is the reason for the toilet charging, not for income but to grab headlines. They pulled the same thing with standing seating which the media all cooed over despite the fact an airline seat must sustain 9g (and the designs they were showing could not).
Yet despite this people will still fly with them for convenience/time saving rather than to a further away airport and drive/bus/train to end destination. Which is fine but do not complain about the way you are being treated or how bad the company is when you keep coming back to them.
Tim,
Is there a reason why on your Forbes story you go through PS4 and XboxOne as both being a lot more expensive in Oz, but commit your Reg article to only the PS4? That tied with the very belated PS4 E3 story, highlighting minor foibles as show-stoppers, and giving MicroSoft an advertising opportunity as an update to that PS4 story, I'd suggest that the Reg isn't being particularly fair in its coverage. In the air of transparency, does The Register take any form of contribution from MicroSoft or its subsidiaries?
If I'm starting to sound like Eadon, please someone shoot me...
The stories are different (in extent, the jokes, the details included) because editors really don't like freelancers sending the same piece to two editors. However, it's fine to rewrite on the same point for different markets.
Very few readers of Forbes will read here: very few here will be reading Forbes. Indeed, in the last three years or so you're the only person, other than myself, that I know reads both sites.
Any mooted financial arrangements at El Reg are an irrelevance here. I wrote the story and not under direction. "Hey, Ed, wanna piece on this?" "Yeah!". And how it was treated was down entirely to me. I should perhaps point out that I have no financial relationship with Microsoft other than indirectly bunging them £40 or whatever every couple of years as I replace yet another PC that has blown up (the last one was a lightning strike on the phone pole outside the office window. The UPS didn't do much good given that the phone line and ethernet cable weren't routed through it).
"please someone shoot me..."
Bang!
Not only Aus, but there is a big price hike for EU/IK punters too, begger even than the XBox hike in percentage terms.
And the people who object don't buy it, but sadly, therea re still too many people in this world that have more money than sense. We still live in a must have society.
So I'm Sony and I am going to import the PS4 @ Oz$550 (inc taxes).
I say "Tough tits chumps, you want it, show me the money."
Company X spots a market and grey imports (PS4 has not region lock apparently) @ Oz$545 (inc. taxes).
They say "Don't be robbed! Buy from us!"
Company Y spots a market and grey imports @ Oz$540 (inc. taxes).
They say "Don't be robbed by X and Sony! Buy from us!"
Repeat until I scream "Strewth!" and lower my prices. The free market works.
All that assumes there is enough wiggle room in the margins (there may or may not be for any given example). But is there actually a free market? Or, like the EU, does Australia legally endorse the operation of cartels and price fixing? e.g. CD-Wow, Levi jeans et al.
I love how everyone is basing a lot of their pricing on the US RP of a PS4. Considering that the item is made in South east Asia and is shipped a relatively small distance the equation should be:
(Manufacturing cost + shipping) + 10% GST + 5% Warranty + Sonys mark up for profit = min price
With the rest of the world having a larger number of competitors in the market place, the profit margins would a lot narrower than the mark ups in Australian stores. I would say that the profit margin in some of the stores in Australia to be close to 35%-45% of the import price and a lot of the big chains will get volume pricing from Sony which would reduce their overall purchase costs.
At the end of the day, because of the closed marketplace in Australia, us poor Aussies are going to be gouged regardless because we are a closed market thanks to our import laws.
Australia has the highest minimum wage in the world. (And you can import very easily from the US).
I think it is much worse in places have very low wages.
You save a fortune if you buy from Oregon (No sales tax) and get it imported. (The fee is nothing compared to the savings on pretty much everything.)
Plus then you can use NTSC (Maybe doesn't matter for Sony)
@Tim Worstall
"The reason that bastard capitalists overcharge Australians is simply that they can."
Yes - that's what the last bit of this sentence means...
"Sony haven't explained their unique pricing structure yet, but it seems like a fairly arbitrary dollop of Australian tax."
..perhaps not all gingers were blessed with the benefit you mention :)
...... as I was led to believe that Aus and Japan had a rather good trade agreement. And why are you all using the dollar price point? As it is a Japanese I would have thought the conversions would be based on the Yen, but I can't find a Yen price anywhere. Are Sony planning to gouge their own home market? ..... Again?
Anyone who suffers from low blood pressure should try reading the Guardian as its enough to make any sane persons blood boill with the rampant hatred, outright lies and utter contempt for the law and common sense.
It's become the Daily Mail of the left wing radicals and while it was originally the bastion of genuine concern for the poor and downtrodden it's only theme is take money from those who are successful and earn it and give it to those who are not because its unfair otherwise.
To the Guardianisa, consoles should be provided free on the NHS so everyone can have one without having the embarrassment of having to work for the money to buy one, and of course everyone who creates such a technological marvel should do it for free.
The communist party of the Soviet bloc had nothing on the frothing mouth lunatics of the Guardian CiF these days so the above article is a thinly veiled attempt at suggesting the manufacturers should ignore the entire economic system and give them away for free to their Socialist brothers down under, as nobody in the Znorthern hemisphere would give them the time of day.
We're supposed to have the North American Free Trade Agreement.
We're supposed to be able to import stuff from the USA with no duty.
And we're supposed to have laws against price fixing.
But manufacturers and distributors in the electronics and automatic industries routinely flaunt the law, barring export of their devices to Canada unless the export is at a special premium price.
Its nothing to do with taxes.
I can go to amazon.com and import DVDs and books no problem.
Try to import headphones, watches, most types of consumer electronics and suddenly I can't. I have to go to amazon.ca and pay 30% more.
Its not just Amazon, the amazon marketplace makes it easy to see it is many retailers.
It is a total disgrace to anyone who believes in free market capitalism because it is taking an oligopoly, the second worst market system next to a monopoly, and using that defective unfair system to besmirch all of capitalism.
Ummm... what makes you think there's no duty to be paid for goods crossing from the US to Canada?
Not all types of good require duty, but some do.
http://www.dutycalculator.com/new-import-duty-and-tax-calculation/
On top of that there are additional costs caused by doing business in Canada.
Some goods need certification by Canadian authorities to be legally sold here, etc., etc.
And not just Federally, some of that is Province by Province and selling to just some Provinces creates its own headaches.
And, of course, that entails translating all documentation into French - and being able to support French customers. If a company has to do that, then they need to have a French call centre. US customers won't get burdened by that cost, but it is spread across English & French Canadian customers because they can't charge French speaking customers more.
And there's more...
Most of these costs are fixed rather than marginal costs, so they are spread across a 30mm customer market rather than a 300mm market.
I feel that at the current price points are too high and Sony will have some difficulty getting people to buy into the PS4, similar to when the PS3 was priced at £350. I personally waited until the PS3 was priced at £250 to buy one, then further down the line I bought a replacement PS3 for £199.
I will probably just play my PC and PS3 until the PS4 is more reasonably priced and if they maintain this pay-to-play attitude of trying to charge for PSN; I won't be buying a PS4 at all.
The amount of money these companies are trying to fleece from customers just to play a game is ridiculous, for example:
* You buy a PS4 £400
* You pay to play online £5pm
* You buy BF4 £35
* You buy Premium (to get the map packs) £35
* You then discover that there are virtually no servers hosting the maps you want to play (in your Country) ...
* You then pay £30 a month for a dedicated server just to play the game you have already bought.
TLDR: I liked the old days of gaming: You buy a console, you buy a game and enjoy yourselves.
From what I've been reading, because the PS4 isn't region specific the Aussies can order if from the US for cost price plus $15 delivery, which would make it cheaper there than in most US states when tax is taken into account. Amazon has confirmed it will ship to Australia.
The Xbone is region specific, which would make it difficult to do the same
I take on board the "foreigner's pay more because they will" arguments, but I'd also consider FX rates.
The Aussie dollar has been riding high off the back of the commodities boom, only now falling away over the past few months, and is widely expected [weasel words; citation needed] to continue to drop as the commodities boom drops off too.
Have a look at 10Y FX rates to see how much of a high it's been on
http://www.xe.com/currencycharts/?from=AUD&to=USD&view=10Y
Sony are going to be selling this console for a year or three before there's a hardware refresh ("PS/4 slim") and/or price drop. Increasing the price of a console during its lifetime is seen as a big no-no, so my guess is they're planning not for today's exchange rates, but with an eye to FX rates for the end of 2014 at the very earliest.
Now you're more than welcome to look at forward rates and the like, but I think it's a little mis-leading to price something that won't be on sale for another 6 months on today's rates when it's then got to sell for at that price for another year or two.
Sure they can take out forward rates and hedge against it, but if they priced it at parity today, and the 12 months from now the AUD plummets and the Australian PS/4 (& xbox etc) starts to look cheap, you know that the grey import market *into* the UK/US would start to take off...
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