01.What we think you should know
CHOICE research in 2012 looked into pricing for over 200 software and hardware products and found Australians are paying about 50% more than consumers in the United States. Today, Adobe, Microsoft and Apple are appearing before a Federal Parliamentary inquiry into IT pricing to explain why.
The technology giants will offer 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 things we'd like you to know about IT pricing:
1. Australians are paying more for technology goods.
On average, Australians are paying 34% more for software, 52% more for iTunes music, 88% more for Wii games and 41% more for computer hardware than US consumers.
2. Claims of high retail rents in Australia are not an excuse.
Retail rents are 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”. You’ll also notice 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.
The tech companies have complained that labour costs in Australia are too high and often point to our supposedly “high” minimum wage.
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 the law. However, these laws aren’t really that dissimilar to ones 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 too high? We doubt it.
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 really be explained by a 10% tax?
6. If it is a copyright issue, we’d like to know.
It’s been argued 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. After all, the purpose of this inquiry is to find out the truth.
7. Geo-blocking is a form of trade barrier.
Tech companies geo-block, which means they make products that are deliberately incompatible with a player you may have or they 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.
There are ways to get around geo-blocking and we have made a handy guide on how to do it. Also if you’re buying Blu-Ray discs from overseas sites, our reviews will let you know which Blu-ray players are region-free.
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 by signing up to be a campaign supporter.