The cost of Apple products varies significantly between countries. As we saw back in May, the cost of an iPhone 6, for example, ranges from an average of $598 in the USA to a staggering $931 in Brazil. But whenever Apple pricing is discussed in Britain, there’s a myth that tends to be repeated: that the company charges a lot more for its products in the UK than in the US.
It’s not difficult to see how people get this impression. Go to apple.com and check the prices of a few products, then compare them to the pricing on apple.com/uk. Here are a couple of illustrative comparisons from the two websites:
- Apple 6s, SIM-free, 64GB: US $749 / UK £619 = $822
- MacBook, 512GB: US $1599 / UK £1299 = $1726
So, on the face of it, UK buyers are paying $73 more for the iPhone and $127 more for the MacBook.
But the comparison is an unfair one. In the USA, sales taxes vary by state. It wouldn’t be practical for Apple’s U.S. website to show pricing for every single state individually, so the prices shown are without sales tax. When you come to actually make your purchase, sales tax is added as per the rules of each state. For most Americans, the price you see on Apple’s website is not the price you will pay.
That’s not Apple doing anything wrong – it’s the norm in most U.S. states that prices are shown before sales tax.
In the UK, sales tax – or VAT as it’s known here – is the same across the country, at 20%. So the UK website shows VAT-inclusive prices. Apple even shows the VAT component beneath UK prices. So, unlike the States, the price you see is the price you will pay.
A true like-for-like comparison, then, would be the price shown on the U.S. site against the ex-VAT price in the UK. So let’s adjust our sums …
For the iPhone, £619 including VAT becomes £516 without it. Convert that to dollars at today’s rate, and you get $686 – or $63 cheaper than the U.S. price.
For the MacBook, £1299 inc VAT becomes £1082, which is $1437 – or $162 cheaper than in the US.
The exact numbers vary by product, and by the day’s exchange rate, but having run these sorts of comparisons multiple times over the years, the ex-VAT UK price ranges from cheaper than the U.S. one to a few percent more. Of course, sales taxes in the USA are far lower than 20%, so yes, in reality, a U.S. customer pays less than a UK one for the same product. But that has nothing at all to do with Apple, and everything to do with the government.
There is one other caveat: Apple hasn’t yet adjusted its conversion rates to take account of the greatly-reduced value of the pound following the Brexit referendum result. My guess is that things are so unstable – some analysts forecasting further falls, others suggesting it will pick up a little – that the company is currently in ‘wait and see’ mode.
Once things settle down, Apple may very well adjust UK pricing to reflect the change in exchange rate – at which point we may indeed have something to complain about. But again, our gripe will not be with Apple, but rather with the absolutely terrible campaigns fought by politicians on both sides of the Brexit debate …