8 things to know about IT pricing

CHOICE busts the myths and reveals the facts behind the cost of IT and technology goods in Australia.
 
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01.What you should know

digital-price-discrimination-lead

In 2012 when CHOICE looked into pricing for more than 200 software and hardware products, we found Australians are paying about 50% more than consumers in the United States. 

Adobe, Microsoft and Apple were later forced to appear before a federal parliamentary inquiry into IT pricing to explain why. The technology giants offered a raft of reasons as to why Australians are being ripped off but, according to our research, most of their claims don’t stack up.

Here are eight facts we'd like you to know about IT pricing.

1. Australians are paying more for technology goods.

On average, Australians are paying 34% more than US consumers for software, 52% more for iTunes music, 88% more for Wii games and 41% more for computer hardware.

2. High retail rents in Australia are not a valid excuse.

Retail rents are undoubtedly high in Australia. However, rental costs have a small impact on revenue. In 2011, JB Hi-Fi spent just 3.88% of its revenue on “occupancy expenses”.  Take note too that the high price disparities also exist for online companies, which have no shopfront.  

3. Suggestions that Australian labour costs are too high are false.

Tech companies complain that labour costs in Australia are too high and often point to our supposedly “high” minimum wage. But research from the Productivity Commission has shown US and Australian retail wages to be more or less the same. While Australian retail staff are generally paid the award wage, American staff often receive commissions in addition to their minimum wage.

4. Australian warranties are not too onerous.

Australia has warranties so consumers are protected by law. However, our laws aren’t really so dissimilar to those that exist in many US states.  It’s also quite a self-defeating argument – by complaining about warranties, tech companies are essentially implying that their products are bad quality, and don’t last very long.

5. Our taxes are not too high.

While prices on most American websites don’t include their sales tax, Australian prices include a 10% GST. However, can a 50% difference in prices, as our research has found in some cases, really be explained by a 10% tax?

6.  The 'copyright defence' doesn't cut it.

Apple argues that iTunes prices are set by the copyright holders. If movie studios and record companies are determining the high prices Australians pay for their copyrighted works, we’d like them to come clean about that. 

7.  Geo-blocking is a form of trade barrier.

Tech companies geo-block, which means they either make products that are deliberately incompatible with a player you may have or won’t let you access the products at all. Geo-blocking works like a trade barrier preventing goods flowing freely across borders, and is entirely controlled by private companies to maximise their own profit.

We've prepared a handy guide on how to get around geo-blocking. 

8. You can help us end IT price discrimination by becoming a campaign supporter.

CHOICE is working on ending price discrimination, geo-blocking and a number of other important campaigns. You can help us out by signing up to be a campaign supporter.

 
 

 

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