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Price gouging: the currency game

As I was skimming through Apple's Spanish website I came across the Bose SoundDock 10. A nice piece of kit if you're prepared to fork over €799.
Written by Dennis Howlett, Contributor on

As I was skimming through Apple's Spanish website I came across the Bose SoundDock 10. A nice piece of kit if you're prepared to fork over €799. As someone who lives on the interwebs, I always check prices elsewhere. Imagine my surprise when I found exactly the same article on the US Apple store for $599.95 plus tax. Over at the UK Apple site, the same thing is available for £699. I was shocked.

It's not uncommon to find that articles available in the US are relatively inexpensive compared to elsewhere but this price difference is excessive. Taking the US pricing as a baseline. it means the currency premium being applied in Spain is: 56.7% after allowing for Spanish sales tax and 49.1% after allowing for UK sales tax. An alternative view might be that non-US pricing is subsidizing US sales.

Regardless of any significant shipping cost additions, this kind of price gouging is not acceptable yet seems all too common. When I mentioned this on Twitter, colleagues from Australia chirped up saying the cost of the Bose SoundDock 10 is the equivalent of around $915 in that country.

When I think about enterprise software licensing, the same situation can arise. It has been reported to me that Oracle licenses are often more expensive to acquire in Europe than the US. Despite there being no official price book in the public domain, if you're smart about acquiring SAP licenses, you can achieve significant cost savings by ensuring the licenses are located in certain countries.

At a time when we live in a so called flat world, is it right that vendors are able to leverage local conditions in this manner? Some will argue it is the market that decides. It's hard to fault the logic. But when we see price differences of this magnitude, the question needs to asked.

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