How we are ripped off

Who, what, why: Are tech goods cheaper in the US than the UK?



Sony and Microsoft have unveiled the prices of their new games consoles, and as usual British gamers will have to cough up more for the identical pieces of kit. Why is this?

Sony announced the price of its new Playstation 4 console in Los Angeles to rapturous applause. At $399 it is significantly cheaper than Microsoft's Xbox One, priced at $499.

But British gamers have less to cheer about, however. As usual, they will pay much more than their American cousins for the same machines - £349 ($546) for the Playstation and £429 ($671) for the Xbox.

The huge disparity has come to be expected by customers on this side of the Atlantic, but how do the companies explain the difference?

"There are many factors that influence the final price of consumer electronics in different markets," a spokesman for Microsoft says. "This includes, but is not limited to tax, tariff and exchange rates."

Tax is certainly a major factor. In the US, sales tax varies from state to state and is added to the headline price at the checkout. In the UK, the 20% VAT charge is included in the price you see.

Even accounting for tax, though, the consoles are more expensive in the UK - around £36 more for the Playstation, and £39 for the Xbox.

Import tariffs do not come into play here. The UK does levy charges on certain items, but consumer electronics are usually exempt. Laptops, mobile phones and video games consoles are duty free, so Customs Duty does not affect the final price.

In terms of exchange rates, it seems reasonable for the companies to protect themselves against a fall in foreign currencies. That may partially explain the higher price charged in the UK by US based Microsoft. Sony is headquartered in Japan, though, which doesn't explain a difference between prices in the US and the UK.


Continued here http://www.bbc.co.uk/news/magazine-22868787

Simple to fix : Don't buy either...

I suspect the other part of it is consumer protection laws.

The US has state-by-state rules, but 30 days warranty is typically the legal minimum, with some states insisting on a 90 day warranty against faults in manufacture or design. After those 90 days, tough, your problem if the machine breaks.

In contrast, we get a guaranteed 6 month warranty against faults in manufacture or design (where the vendor must prove that a fault is caused by the buyer, not a design or manufacturing flaw - see http://www.legislation.gov.uk/ukpga/1979/54/section/48A ), and an unbounded warranty against design and manufacturing flaws, limited only by the usual statute of limitations that applies to any claim.

If your expectation is a 1 in 10 chance that there's a serious design flaw (like the XBox 360 Red Rings Of Death) that won't expose itself until after the first 90 days of ownership, that'd explain the difference - US customers can be told to go screw themselves unless they were profitable (checked against your XBL or PSN account), while UK customers are entitled to remedies in law.

What do you care as you aint buying either...

Also companies want to insulate themselves against currency fluctuations.

The last thing they want is a constantly up and down shifting of prices around the world.

I agree with the point over warrenty, when MS said that the first set of Xbox 360's wouldn't see out three years caused a huge storm. All these insurance companies who had sold extended warrenties were being told that frankly they will have to pay out on what was poorly built goods.

I went to the US fairly recently and was shocked that the prices on mid range electronics was MORE expensive than the UK. I was asking some friends about it and they said that there had been a sudden surge in prices couple of years back and now for big screen TV's etc the UK is now cheaper than the US.

When I told them how much I paid for my TV they were shocked how cheap it was.

So not everything is rosy in the US at the moment.

In reply to a post by Lt_Swan:

Even accounting for tax, though, the consoles are more expensive in the UK - around £36 more for the Playstation, and £39 for the Xbox.

Probably to cover the extended warranty period in the UK and other EU states. Consumer law in the US looks to be a bit rubbish...

Thank you for someone else saying what I have noticed for a while. Hopefully I won't get odd looks the next trip for having two touchscreen phones.

US via Walmart has lots of cheap stuff available but with various unknown brand names from the far east.

Indeed. Add to that salary expectations, pension liabilities, holiday/sick entitlement. There could be numerous extra overheads, but the same expected level of margin.

I think £349-00 is a banging price.

Which then equates to £600 when you buy 3/4 games and a extra controller like me.

Im not complaining just wish i could get me mitts on it next week and not have to wait another 6 months.

Not really interested in the eye thingy as i hate anything motion controlled with a passion,and everything i have played be it Kinnect or Playstation move was a gimmick at best.

Edited by time2die (Thu 13-Jun-13 17:12:54)

Article on the BBC which covers the issue and most of the points made above, the last few paragraphs are quite interesting.