There is no excuse why downloadable content should cost more -- economies of scale, shipping costs, and differences in taxes and exchange rates are all irrelevant. Even in the case of physical goods, the disparity is often drastically more than can be accounted for by the above reasons. This comment sums it up quite well: http://news.cnet.com/8618-1001_3-57568633.html?assetTypeId=1...
Why would they need an "excuse"? Pricing is only indirectly related to costs; doubly so with software, where gross profit margins are often higher than 90%. Why is this particular arbitrary price bad, while other arbitrary prices aren't? Sure they'd still make money if they charged the same, but so what?
Maybe because it's particularly insulting to the intelligence, especially when your customers are computer savvy people who know just how arbitrary region-based pricing of digital goods is?
I'm not saying it's without merit, but my blood pressure raises a little every time I hear this argument. It comes across as, "STFU and don't buy if you don't want it!"
When in reality, the original consumer considered this but would rather pursue a more active response than to sulkily and more important silently use something else.
Yes "voting with one's wallet" is certainly an option. But it should not be the sole option as you seem to suggest.
That's fine, there are indeed more options! Nobody mentioned silence :)
You can start a newsletter, informing fellow inflicted customers. Tell your friends and family. Launch a slandering campaign on facebook/internet (within the bounds of law, preferably!). Support a competitor. Promote fewer business regulations, so there are more competitors. Post on Hacker News. Etc &c, depending on one's disposition.
But my blood pressure raises every time I hear someone's blood pressure fluctuated and they want to pass a global regulation affecting everyone (incl. me) because of it. No, thanks.
I, personally, don't want global legislation. I want either companies to not act like total dicks (Pricing in Ethiopia should be lower, pricing in Australia shouldn't be twice as much) OR for the AUS and US governments to make a joint agreement to, at the least, issue a large, nasty "Please Explain" from a body of authority.
But I am also coming from a background where the governmental consumer watchdog is very powerful, so that colours my opinions on what can/should usefully be done.
How about you buy one license and pirate another? That way the price would be roughly equal to what it would have cost if you had bought 2 copies in the US... All is fair in the world :)
So there are often strategies put in place to ensure that an Australian customer can't purchase at the US price, on the basis that... well... fuck you we want your money that's why.
I would agree with your point if digital content producers didn't use geocoding to prevent me from accessing their US store o block non-US credit cards. The problem is not that this price is arbitrary, but that it's not. It's a deliberate, nasty piece of geographical discrimination.
There is no excuse why a movie ticket for a 7:00 PM showing should cost more than a movie ticket for the first showing of the day. If anything it should cost less because there are more people in attendance making the cost per attendee lower. Outrage! Let's get the United Nations, Interpol, and the Parliament to intervene!
If country X holds me liable under their law for selling goods in country X†, then I am either going to have to pay someone to understand that liability and quantify the expected variable cost, or just guess at it and hope.
If country X is a relatively small market for me those fixed costs amortized over the sales are going to be noticeable even if the risk per sale isn't higher than my home country.
␄
† Are they going to arrest me and keep me in jail when I come to speak at a conference? Are they going to nab me when a connecting flight lands on their soil and put me in jail? Are they going to enter a massive default judgement against me if I don't hire a defense each time someone files a claim? Can they collect those?
Downloadable / electronic distribution really has nothing to do with it. They value their product to be significantly more than the average price of a game etc, hence the higher price. If their customers don't think the product is that valuable they will either go out of business because no one is buying it at that price, or they will lower their prices.
It's all the fault of Aussies themselves - if they want to fix this, they simply need to ensure (through their lawmakers) that the first sale doctrine applies fairly as intended, and within a week there will be redistributors selling legal boxed Adobe software (imported from US) for decent prices.
It wouldn't be equal to USA prices, since VAT and some markup would apply, but if there is any competition whatsoever, there won't be a markup of $1000 for a single box.
There's nothing stopping anyone from ordering from the US (eg. on amazon), apart from the extra GST (10%) added on top by aussie customs. On Amazon its only $2166 + 10% GST
The main issue is the RRP (recommended retail price) put out by the developer (Adobe) which is totally ludicrous. My favourite is Microsoft AU's official RRP for the Windows 8 Pro Upgrade at AU$399. In the US its $199.
In my opinion, home users tend to shop around more and will be able to spot a bargain, but business users will probably be the ones being ripped off.
"Ripped off" is really the wrong term for the pricing discrepancy created by having different places to buy the software within one market. The better term is "price discrimination".
Business users of everything are less price sensitive so intelligent sellers of services, software, hardware etc. attempt to capitalize on them through price discrimination.
In this case, Adobe (or distributors) are aware that businesses would rather not have someone shopping around for software when they could be doing something else more productive so they would pay more. The seller is able to capture the surplus. This is a good article that at least early on focuses on inconvenience as the mechanism for price discrimination: https://www.rca.org/page.aspx?pid=2995
Because of the comment before your's, I am not sure whether Adobe is using price discrimination against Australian customers but pharmaceutical companies do price discriminate based on geographic location. (There is also a mention of this in the article above).
Effective price discrimination is a way to extract the correct price from various customers and ignores costs.
If a customer nets value by purchasing a product, the product is priced fairly to them. Different users of the same product get different values, so every seller should try to figure out a way to get price as close to the value gained for each purchase for each customer.
The effect of price discrimination is higher profits for the seller, but it also spreads the cost of R&D more fairly based on value received by buyers. Theoretically PD should drive increased innovation long term.
I've always thought first-sale doctrine is an interesting and important check on price discrimination. People usually get angry with the concept of price discrimination, it seems to grate at the idea of fairness. Poorly or improperly implemented price discrimination coupled with a strong first-sale doctrine will lead to interesting new arbitrage opportunities.
The pending case of Kirtsaeng v. John Wiley & Sons, Inc is a good example of arbitrageur vs price discriminator. The result of witch will be really important.
These articles take the wrong perspective - it's not that Australia is much more expensive in tech matters, it's that the US is much more cheap. I don't know where the recent Australia-specific articles are coming from, but it's been like this since as long as I can remember - that the US is much more cheap than any other country I'm familiar with for tech stuff, including Australia, but also almost every other country.
For example in Europe, the same suite mentioned in the article costs USD 4552.14, or $200 more expensive even than Australia.
Australia is extremely expensive for a lot of stuff. Europe is too, but less so (having lived in both).
Part of this is that the AUD has appreciated in value so much over the last few years, and retailers are just not willing to drop their prices in line with the new purchasing power of the dollar. They also haven't caught up with the modern world in a lot of ways, considering that they still have a captive audience that can't just order off the 'net.
Part of this is down to protectivist legislation, for instance the price of books over there is huge and that is in part due to measures put in place to protect local authors and publishers. The net result though is that bookshops go out of business because people just get stuff online, delivered from other parts of the world. There are also weird legally-backed 'exclusive importer' agreements that result in the same phenomenon with other goods.
Part of the problem is retail rental rates are so high that traditional retailers have to have high prices, and in Oz the online services are usually run by the same folks. So again, business goes abroad.
Part of the problem is that some foreign businesses (Blizzard, I'm looking at you) just gouge Australians. Starcraft II was a hundred bucks to buy online from Australia!
So there's a whole culture of stuff just being expensive over there. The government needs to clean up their own act, but looking at what the private sector tries to pull is also interesting.
Incidentally Apple seemed to me to be one of the few organisations that were not overpriced over there, comparing US and AU prices on their store it was always pretty even (when tax was accounted for)
Part of this is that the AUD has appreciated in value so much over the last few years
Yep, many other countries have had economic downturns lately, a lot of australian economy is based off mining, which is going OK. Ergo, currency appreciates.
Part of the problem is retail rental rates are so high
DANGER WILL ROBINSON! That's partially a sign that the property market is in a bubble or inflated. Many other countries have been wrecked when the property bubble pops. It might happen in Australia.
Property bubble has been predicted in Australia for years now. I was waiting for a market crash for years too, but now I'm not entirely convinced. With high urban sprawl, poor transport options, growing population and generally high income, I'm not surprised property costs as much as it does now.
I did start to wonder, when a coworker said he had made some sort of investment in a long term retail let that they were then short-term subletting, if this was entirely normal.
Because price difference was always effectively a rounding error when I calculated US price + Australian GST vs Australian price. I haven't looked for a while though, having moved back to the UK last year.
Yeah, the few I checked seem fine, although Apple does like to round up to the nearest 49 or 99. Apple doesn't like to reprice products though, so if there are is significant currency movement in the 6 months since something came out, it is probably not reflected in the price.
The UK is pretty much in line with the US, but here in Ireland (where their European distribution centre is :s) it's a fair bit higher. Taking the iMac 21.5":
US $1299
UK £1099 - 20% tax = £879 = $1368
IE €1399 - 23% tax = €1077 = $1452
Once upon a time, the Australian dollar was worth about 50 US cents, so things in Australia cost about double what it cost in the US. Then the Australian economy started booming, and now the AUD is stronger than the USD. But everyone who sells stuff in Australia thought "wait a minute, these guys are used to paying double, so what incentive do we have to change?".
So now you have retarded pricing, like some places expecting you to pay $110 US dollars for a single video game. Don't even get me started on the price of food. Unless Australian retailers change their tactics, they will slowly go out of business, because an entire generation of computer literate people realize you can get 2-3x more out of your money just by buying from online stores.
> Unless Australian retailers change their tactics, they will slowly go out of business, because an entire generation of computer literate people realize you can get 2-3x more out of your money just by buying from online stores.
Buying online from overseas only works until the government put in place laws to prevent circumvention of technical rights protection measures. Like the DMCA in the US, or " European Directive 2001/29/EC of the European Parliament and of the council of May 22, 2001 on the harmonisation of certain aspects of copyright and related rights in the information society." in EU.
That means that turning your DVD into a region free player is illegal; chipping a console so it can play region locked games is illegal; etc.
Australian law explicitly allows for consumers to circumvent region locking. Of course, this doesn't mean this can't change, but at least there's explicit precedent allowing it.
Quote from the Attorney General's department:
“An access control TPM specifically excludes TPMs which control geographic market segmentation. This means that consumers will be able to circumvent the region coding TPMs on legitimate DVDs purchased overseas. It also allows for the continued availability of region-free DVD players.”
TPM is a term from the US/Australian Free-Trade Agreement.
You missed the point of my comment. It makes more sense to single out the US if they are the only one with much lower prices than everything else, instead of talking about every country where it is more expensive - in this case, most if not all countries in the world.
It's the exception to the rule that is interesting, and in this case, the exception is the US.
I travelled around Australia for a few weeks and have been to many European countries (EU & non EU). Australia is expensive (in general). It's in the same price league as Switzerland. Which is bad.
I think you forgot to subtract VAT (which you'd not pay if you're using this as a pro). The price on Adobe Belgium is EUR 3386.79, which without VAT comes to EUR 2799, or about $3770.
I'm surprised no one mentioned the exorbitant prices of electronics in Brazil compared to the US. For example, the top of the line Macbook 15" retina in the Brazilian Apple store costs R$12599 which is around $6395USD, while the same in the US is $2799. A Brazil/Miami return flight is also around $1000 depending on the time of year. So theoretically it's cheaper for Brazilians to go to Miami, have a nice weeklong vacation, buy a Macbook Retina, iPhone, iPod, iPad, clothes, and much more, than buy a single Macbook here and still wait for shipping. The problem is the government/customs knows that and thus catches and taxes a lot of people who try to bring over $500USD worth of products. And for whoever mentions that the cost of living is cheaper in Brazil, the big cities like Sao Paulo is the same or worse than NYC if you factor in salary.
And South Americans are actually doing just that. Travel to Florida and shop for prices 50% lower than in Brazil:
"The Sawgrass Mills mall has enough retail space to fill more than 40 football fields. Most notably, Sawgrass attracts destination shoppers from South America."
This is not entirely true. Even if you factor in the plethora of taxes Brazilians businesses and customers are "enslaved" to pay, it still should not be this abusive. In Brazil, people consider imported products (specially Apple's stuff in the electronics category) to be something of super high status, so they are willing to pay for an Apple product in 12 installments with their credit cards, money they know they shouldn't spend. Suppliers and importers are extremely aware of this Brazilian mentality and exploit it to its maximum potential. This happens across all kinds of products: all types of electronics, clothing, cars, MacDonald's, you name it. I'm not even taking price-fixing (which happens in Brazil's car industry for example) into account. A new Honda Civic in Brazil costs around $35000 USD, while the minimum wage is around $320 USD/month. Talk about inequality...
> The problem is the government/customs knows that and thus catches and taxes a lot of people who try to bring over $500USD worth of products.
Does this mean the difference in the price of the Macbook is entirely taxes? Or, after paying an import duty at the airport, would the overall cost still be lower than buying the hardware domestically?
My friends in São Paulo just did that with an iMac - bought it in Arizona during their Christmas trip to the US, declared it at Guarulhos airport, paid the import imposts and still came in with a huge discount to the local retail price.
Yeah, still at least a headline discount of 20-25%. And they were going to AZ anyway, so it felt like 40-50% to them. Everyone was wearing new shoes too, prices in the US are significantly cheaper than in São Paulo
No, the difference isn't entirely taxes, far from it. Apple is responsible for the largest part of it as the total import tax they pay amounts for 38.75% of the factory price, not the US retail price.
What I never get about this and the differences in pricing in movies, music, books, branded clothes, etc. is that this is all tacitly approved by all the governments. That Nike or Adobe or whomever can stop people from buying it cheaper in one country and then selling it at a profit in another country is frankly bizarre.
But then they'll throw a fit at each other if one country says 'no, you can't sell you're cheap bananas here' and all start blathering about free trade.
Free trade is good in everything apart from IP apparently.
The government doesn't have much to do with it, it's all contract law. Adobe makes a deal with a local distributor -- we won't sell directly into your territory, we will label our goods so you can discriminate (e.g. not provide service or upgrades for "grey market" products).
The real scandal is that the sftware (or hardware) company sells its products at a wholesale price to the local distributor that prices in support, but has not agreed not to support it, and the the local distributor prices support into the local price. So you get lousy (lousier) support and are denied mothership support you paid for.
I don't know who the local distributor is in Australia (it might even be Adobe itself -- doesn't usually matter, it effectively works the same way) but back in the good old days it was firmware design (at least for macromedia products) and if you asked for support and the locals were no help and you persisted they'd simply escalate it to the US vendor. So you paid extra for friction.
It used to be worth flying to the US to buy a Mac. It's nice that Adobe is doing its part...
Its the government that gives out copyright protections. It is the state that grant monopoly power to Adobe. The Australian government could have any rules, laws and consumer protection in place in return for this granted monopoly, and thus limit how companies like Adobe abuses this granted monopoly in Australia.
The existence of a gray market should keep the local distributor (and Adobe's region-specific) pricing down though. If it goes too high, then people will favor the gray market.
So yes - local prices may be higher. But not that much higher.
The gray market doesn't depend on contract law, since an unauthorized distributor should be free to buy up inventory however it can (eg. pose as a customer). But this doesn't work with software, and that's the problem.
When the retail price is that different it's cheaper to buy at retail in the US than from the distributor in your home country. The only reason this does not happen is IP law in the home country in direct opposition of free trade.
If you buy the US version of Adobe software then using it in another region is not allowed in their EULA. So it's almost the same as torrenting it except you paid for it. After a quick look I found these in their EULA:
"Adobe grants Customer a non-exclusive and limited license to install and use the Software (a) in the territory or region where Customer obtains the Software from Adobe or Adobe’s authorized reseller or as otherwise stated in the Documentation (“Territory”)"
"4.9 Territory. Customer shall only use the Software and access the Adobe Online Services in the Territory and in a manner consistent with the activation policy described at http://www.adobe.com/go/activation. Adobe may terminate the license granted herein or suspend the Membership or access to the Adobe Online Services if Adobe determines that Customer is using the Software or Adobe Online Services outside the Territory."
So... technically, that means that if I (an American) go on a business trip to Australia, open my laptop and use my paid-for copy of Photoshop, Adobe could terminate my license?
As an Australian (now an NYC resident), I am no stranger to the price gouging that Australians have had to suffer although I must say that how it is now is much, much better than it was 10-20 years ago.
First, it's worth noting that US prices don't include sales tax. Australian prices include a 10% GST.
Second, international companies will end up doing their accounting in one currency. For tech companies unsurprisingly this is US dollars. Transactions in foreign currencies get converted to USD. Companies hedge themselves against FX risk by locking in exchange rates and giving themselves a buffer so they don't need to change prices every day. Ergo, things in foreign currencies will always cost a little bit more.
So if a Macbook Air costs US$999 and A$1099 (hypothetical, the Apple store is down so I can't check what the actual price is) then that's about right (given A$1 = ~US$1.04).
That all being said, high prices in Australia largely come from it being a small market and, more importantly, consumers putting up with it.
Books are the worst example of this. UK companies get the distribution rights for Australia. Australian copyright law largely protects them from imports (although this was relaxed by the previous Howard government in a 1am Senate vote). Yet what costs $10 in the US will cost $25 in Australia.
The Dell E6x00 laptops routinely cost <$!000 in the US but cost ~$2.5k in Australia for no readily apparent reason (it's been a year or two since I looked at this so it may have changed).
The "waterbed effect" seems to play a part too. The US is a large single market so has a lot of purchasing power compared to pretty much any other market. I've thought that cameras are cheaper in the US (than Europe or Australia) for this reason more than anything else.
To give an Australian corollary to this: Dan Murphy, the largest alcohol retailer owned by one of the two supermarket conglomerates (Woolworths), is killing smaller competitors because their purchasing power is so large they can often sell things (at a profit) for less than non-chain stores can buy them wholesale.
For software in the era of digital distribution there's no justification for Adobe's prices here. It's the same software in the same language. Perhaps they needed different TOS/EULAs for Australia (or at least have them reviewed to make sure they are compliant with Australian law). That's about it.
One thing to be thankful for is the ACCC in Australia actually has teeth and through the Trade Practices Act and Corporations Act has a lot of power. The FTC in comparison seems to be a partisan paper tiger in comparison.
> That all being said, high prices in Australia largely come from it being a small market
That doesn't explain why goods are cheaper in New Zealand[1].
If you have ever bought a pair of Levi's you would find that because they come from the same distributor the price for NZ and the price for AU are on the same tag, and the NZ price is consistently cheaper. You find the same on a lot of goods [2]
It is much more nuanced, Australia is specifically getting screwed. A combination of taking advantage of an early adopting wealthy market with heavy regulation, little local competition and our nieve willingness to play along.
One obvious solution would be for Australia to start or join a free trade zone. In the European Union you are not allowed to prevent people from trading across borders or discriminating them on their country of residence, so price differences between countries are relatively small.
I realize most free trade zones are between neighbouring countries but I don't see why they couldn't do a free trade zone with the USA, for example.
New Zealand has one with China, and a bunch of other countries. We also have almost no other import barriers, grey market imports are legal and we can even easily import and register second hand cars, impossible in most countries.
People always find a way... Never looked at Adobe, but, Cisco, Apple, Microsoft and more all have reseller programs that have agreements that only allow you to purchase from your own country or there are penalties/no rebates/no support/similar if you go outside - along with other rules such as making distributors only sell to partners.
I'm not saying it isn't possible - I buy a lot of kit from mainland Europe where it is cheaper, but, this basically locks me out of the Cisco partner program where I would be a gold partner by now with many other benefits...
Thanks for bringing up the currency risk - while certainly not responsible for the entire price difference, the cost for hedging risk against foreign currency in Australia has increased quite a bit according to the Australian central bank (from 5-10 basis points to 30-40 - http://www.rba.gov.au/publications/fsr/2010/mar/html/box-b.h...) which will definitely put a dent in your profit margin if you start accepting Aussie dollars.
Thanks for looking that up and providing some data. But 30-40 basis points = ~0.35%, which is ~1/300th of the ~100% difference in price, so it seems like it's not a significant factor.
Besides the illegality of it, what's to stop me being a purchase broker for an Australian and buying US products then shipping them to Australia to people for a huge discount?
The same thing happens in the UK. Napster for example charges more than 50% more for a download service in the UK, than in the USA. Completely ridiculous for an internet based download service.
I was going to subscribe until I learned this. Can't support business's gouging their clients.
I think taxes and fees associated with international business are much more complicated than you suggest ... you seem to suggest that there is no additional cost whatsoever. That's an interesting claim.
I have both a grudging respect and an intense dislike of Adobe for their complete ownership of the creative software space. It's kind of amazing, and it's the clearest example of a monopoly that I experience in my everyday life. Well done, I guess?
No I guess you are right actually. I think I should have said "the government for allowing Adobe to take complete monopolistic control of an industry".
There are two ways of looking at this, as a consumer and as a company.
As a consumer obviously we want everything to be cheaper, not just compared to elsewhere, but in general. Who wouldn't like Apple products to be cheaper, or cheaper DSL, cheaper cable etc.
As a company you're in it to make money, period. Pricing is one of the most complicated and imprecise things a company has to deal with. Once you set a price you basically anchor yourself to it in case you later find out that that price was low and you could have charged higher. If you set the price too high then there is always the option to go lower, or offer discounts. You also need to take into account different categories of customers, based on region in this case, and try to price discriminate such that you are able to charge the price that would bring maximum profit (not revenue) and where people cannot go across these categories to buy another comparable product. For example, senior, student, children discounts for movie tickets.
Then there are com parables you need to take into account, like Coke and Pepsi are substitutes to an extent, Photoshop and Gimp are not. IntelliJ and Eclipse are, so IntelliJ has to make sure it is offering value for which it can charge.
Microsoft also does regional pricing, and its products are dirt cheap in China and other economies where there is rampant piracy, since there it is effectively competing with its own product being offered for free.
Companies always try to maximize profits and if they can get higher profits and are not anchored to a lower price, they will do so. There is nothing wrong with it, its just business, which pays our salaries and also for entrepreneurs keeps our investors happy.
Example: price of Creative Suite® 6 Design Standard is USD1,299 versus GBP1,227, despite the fact that the exchange rate is around 1.55.
For some stupid unknown reason, Adobe will usually charge the same unit price in GBP as they do in USD. They will quote "cost of operating" is higher in the UK, but 55% higher? Bullshit.
1. Australia is a small market, so for a lot of things there are poor economies of scale and/or cozy oligopolies.
2. Exchange rates.
Then along came:
3. Artificial market segmentation.
Region encoding, per-country versions and so on. There's no technical reason for this, it's done simply because (thanks AUSFTA) it can be done.
The artificial segmentation didn't used to be a big problem until the AUD shot up against the USD. Now that our dollar is at approximate parity with the American, it's very easy to compare prices.
Mix in the fact that retail prices have remain steadfastly fixed in place in spite of the change in exchange rate, and consumers have correctly deduced that retailers and distributors are simply taking a windfall and running with it. That nobody is aggressively undercutting goes back to 1.
Your last point is the most salient. Until downloadable software became all the rage in recent years, there was effectively nowhere else to buy from.
I once bought a new Thinkpad on ebay from a guy in New York who ordered them in sight:unseen to resell to Aussies. He had no idea why they were so expensive here, he just saw he could make a bob or two reselling the retail US models for 2/3rds the Aus price.
Could there be something in the constitution to prevent it? The Australian constitution is derived from UK and US, and section 92 mandates free trade between states.
This isn't relevant; it only governs the actions of the US Congress. Australia has similar language to prevent the Commonwealth Parliament from discriminating between the states.
Maybe be taxes. I assume Adobe is pumping Australian revenue to its Ireland unit while the US revenue goes through the main company. Maximize revenue overseas since the profit is taxed at a lower rate effective rate. Just a guess.
"The revenues generated by Adobe’s Irish unit represent 55 per cent of Adobe’s worldwide revenues of $4.2 billion in the year to the end of December 2nd 2011"
This is probably not something you'll hear the companies say themselves, but frequently the exchange rate between the US and other countries is set on a yearly or even long-term historical basis and not modified.
With the long term historical average of AUD-USD at around 65 cents, this can make software look outrageously overpriced. Given the relative size of the Australian market (2-4% sometimes) there is little incentive to change this methodology.
A lot of tech stuff is pretty cheap. Hardware which is sourced from Taiwan and other nearby tech supply countries are reasonably priced when landed by the smaller, sometimes Asian run firms.
The big retailers have a cartel like influence you could argue. Just about everything not made of pulverised rock or grown in pulverised rock is imported from somewhere. This allows what should be tech commodity businesses to charge what the market will bear, rather than competitive prices. A bit like mobile carriers in the states really.
Australia has a high tech take up, but its a very small market with a high dollar, so it's easy to get your dollars without worrying about volume.
People are willing to pay more, so companies charge more.
There is also higher cost of operating, higher wages etc. But I think all that is besides the point, companies want to maximize profits and if they can charge a higher price and still get a similar amount of sales to a lower price (as in Australia) they will charge high.
I've heard that setting up shop is quite expensive in Australia due to a number of factors, and that the online prices is matched up to the retail price to avoid hurting profits.
Starting a business in Australia is ridiculously expensive. In the UK it's £20 ( last time I looked ). In Australia it was $900 or so when I looked. Lots of regulations on this and that. My pet theory is that it started out militaristically and has stayed that way ever since.
I was answering the first part of the grandparent. It's easy to start a self employed business, but I'm referring to limited liability companies in the UK and incorporated companies in Australia. Pretty obvious really, that's why the UK is a nation of small shopkeepers. It's simple to do.
Has nothing to do with the cost of software, except in respect of margins, which I and others have mentioned are kept at near parity in the large retail sector, a sector with somewhat unstressed economies of scale.
Incorporating a company is relatively cheap ($450AUD) and the last time I did it, it was done <10 minutes. All you need to do is scan and email through some identification, nominate the directors, and set the allocation of shares. Most online "company incorporation" providers send you all the material to conduct your first meeting of directors and the Corporations Act provides a standardized set of "replaceable" rules that you can use as is, or modify to form your company's constitution.
You can then register with the ATO (<10 minutes) and you're all done: ACN and TFN.
Summary: In Australia <$500 and <20minutes gets you a Pty. Ltd. from your couch at home.
Thanks for that. I only had a cursory look at starting a company with an ABN when in Australia. It was a few years ago, but I was initially shocked at the difference. In the UK it's £20 to register a private limited company, £15 for the annual return, and that's it for companies house. Inland revenue and employment is extra, but it's cheap to set up trading companies in the UK. And the more of those you have the more likely you are to have competitive pressures in retail.
I'm no expert on Australia's seemingly top heavy retail structure. Maybe it's just an incorrect impression I have that the top end of town gets accommodated, but that the rest have lots of hoops to jump through.
You can get an ABN[1] and set up as a sole trader/partnership online completely free if you're an Australian citizen (I'm not sure whether you can if you're foreign).
I paid about $560 to set up my company (a company has an ACN[2] from the ASIC[3] and an ABN and TFN[4] from the ATO[5]) but if you do the paperwork yourself it's cheaper.
1. Australian Business Number
2. Australian Company Number
3. Australian Securities and Investment Commission
4. Tax File Number
5. Australian Tax Office
Yes, setting up as a sole trade is completely free, just need to fill in some paperwork. Setting up a Pty Ltd is a $399AU ASIC fee last I checked, and filling in some more paperwork.
I used a service for this, which produced all of the necessary documentation for me, which cost only $200 extra.
It then costs about $200-$300 a year to maintain through the annual ASIC renewal fee.
Looking for a Photoshop alternative ? Please take a look into Gimp, I'm using it for a long time now. If the money you pay for licensing Photoshop was put in new creative ideas in Gimp, I'm pretty sure it would look as awesome, as Photoshop! Take a look please :)
The Gimp is a good alternative to pirating Photoshop, but people who pay $4k for Photoshop will not use the Gimp for free. Not now and probably not ever. It's just not at all comparable for professional use. Just like OpenOffice Calc vs. Excel.
This is the real solution to the "Adobe problem". They are still living in the old world of high priced software and are able to charge these ridiculous prices because they don't face any real competition. Gimp is pretty good but still needs lots of work and/or a killer feature or two to convince people to abandon Adobe. Contribute to Gimp if you can!
That's so true! What I see is, there's so many creative people using Photoshop, putting so much money into Adobe. They could contribute with their own views, ideas, needs, etc. Gimp would become ridiculous good just because of that!
Dunno if that would work. Adobe (unlike Amazon) would require your credit card billing address to be in the US. Not sure if it has changed now, but a few years back i tried buying Adobe Lightroom from the US site and was unable to do so.
My workaround was to buy the retail box from Amazon, ship it to a friend in the US and have them email the license key to me.
You want to know the real reason prices are so much higher in other countries? It has to do with historical exchange rates and companies not adjusting prices when the exchange rate improve in their favor.
Let's look back 10 years ago. Around 10 years ago AU$1 was worth about US$0.60. So, at the time if the US version sold for US$2500 you would need to sell the Australian version for about AU$4166 (before any tax difference) to make the same US$2500.
Now, fast forward 10 years. Over this period Australians have become used to paying about AU$4k for the product but in the background the exchange rate continued to improve in favor of the AU$, to the point where today were the two currencies are worth about the same (AU$ are actually worth slightly more now). BUT because Australians are used to paying the price, there has never been any incentive for Adobe to reduce the price. The same applies for video games, or just about anything else on the market.
Now, I'm not defending Adobe, but from a business perspective I can understand how this happened. You have an exchange rate that slowly creeps up over 10 years. You don't see sales dropping, so why reduce your price, right? This is now the predicament they're in, they kept the price steady and now they have to pay the price with media attention. So, what t
Had this been the other way, and the exchange rate declined for the AU$, you can be damn sure Adobe would have taken corrective price action.
I work in the design industry in Australia, and it's very rare for anyone to have a legitimate copy. By no means quantitative data, but the piracy rate is probably quite high. Adobe doesn't exactly make it easy by dropping backwards compatibility for a version behind.
Alternatively, I also work in the design industry and have friends who do and aside from students, most have a legitimate license from my experience and also speaking for myself.
I once asked how much it cost for the Jonathon Coulton song on iTunes in the U.S. as opposed to the price in Australia. I was downvoted to oblivion. [1]
It's been known for some time now that Australian are being gouged by multinational and local corporations. There should be no real reason why iTunes is more expensive in Australia than in the U.S. - our exchange rates are on a par with the U.S. (and in fact, at times exceeded the U.S. dollar!) and there is no real tangible transport costs. Even a 10% consumption tax doesn't explain the difference in prices between the two countries, for the same product.
I have always held off buying Adobe Photoshop and Adobe Lightroom for myself, because it is very expensive. One day about 2 years ago, I saw an ad somewhere, that I could buy a bundle of both pieces of software for 800USD (I think it was). Seems fair, I thought and went to buy it online in Adobe's shop. But as a European, I was forced to the store of my country (Denmark) and the price was at least double. I tried buying from the us shop (since no physical delivery was needed), but was rejected for using a Danish credit card.
I still don't own Photoshop and Lightroom and Adobe is out 800 USD.
I make sure my software my company creates and sells is more or less an equivalent price no matter where you buy it from. In the age of digital delivery, it seems the correct way to do it.
Then again, even books sometimes have a 'mass market edition' for countries like India, that costs about a fifth than the US paperback.
I'm not sure it makes sense to sell at the same price all over the world. What does it even mean 'to sell at the same price', who defines the exchange rate?
The exchange rate of some currency often reflects market forces and speculation, and the purchasing power parity exchange rate can be wildly different. In some countries, such as Zimbabwe, the exchange rate with the USD depended strongly on who you were and where you bought it! [0]
Maybe you could define a hourly-rate-equivalent-price: if a Photoshop license costs $2500 [1] in the US and one hour of the median Photoshop-using professional is worth $25 in the US, then Photoshop should cost like 100 hours of work in the country where you sell it, so maybe 500$ in India and $200 in China.
True, but are they worth so much less? Do you think that any publisher would sell their textbooks as ebooks for the same price to US students and to Indian students?
Scenario - You run your software company in the US. Cost of living is X and taxes are Y. You now expand to Japan. Cost of living for a sales person is 2X and taxes are 2Y. How do you pay that person if your price is the same? Don't operate there?
This reminds me of a story[1] around 8 years ago of the eye-watering costs of ADSL in South Africa. Whereby it was cheaper to fly to Hong Kong and download 100GB of data in an internet cafe than it was from home using the incumbent telco provider, Telkom.
Same with cars, only the workaround is expensive or impossible.
For example take a brand new Subaru wrx:
US starts at $25,795
Australia starts at $44,377
In both cases the car needs to be imported and also falls under Australia's luxury car tax so the comparison is reasonably fair. The more expensive a car is the worse it gets (a Nissan gtr will set you back 170k+).
Sure a little bit of this is first world problems, still annoying though.
We've got some companies in Holland that take care of that problem. You buy the car abroad and have the companies strip them and replace luxery items with standard stuff. Car goes to customs, the price is estimated and a tax is paid. Car gets assembled with all the good stuff. (Most profitable for cars that are 1 year old). Tried to do this with a Harley davidson bike from NY to Holland. Failed because you really need someone on the other end (buyer you can trust).
Actually, a WRX won't have the luxury car tax applied to it; from Wiki: The LCT threshold is currently $59,133.00AUD. Car pricing in Australia is pretty horrific, which is probably due to both taxation and the government trying to protect local manufacturers.
When I was living in the UK in 2005, it was cheaper to fly to new york and buy a IBM Thinkpad Laptop, than it was to buy one in the UK. The US price in dollars was the same as the UK price in pounds, even thought $2=£1. And the return flight to new york was only £200. Buy two, and you could make a nice little profit.
This reminds me of working for a software tools company in the late 90's, selling IDEs and metrics tools to investment banks and telcos. One day, a potential customer called to ask about the price of a license. "1500", my boss said. "1500 what?", asked the customer. "Where are you?". It's a good thing the customer wasn't in Japan...
Some price comparison site should set up a how-much-it-would-cost-you-in-America feature for Aussies. You search for a product, see a few local prices, and the US price alongside.
Local vendors would scream at this sale-killing feature, and the PR win would be something amazing. It might even lower local prices.
This is a bug with the copyright system. The software is copyrighted and only Adobe can sell it. So they can sell what they want.
One copyright reform I'd make, would be removing copyright protection from works like this where are sold as massively different rates between markets. You'd need to look at average wage in the country and compare (rather than a simple metric of 'can you fly to $OTHERCOUNTRY and buy it for less overall?'). If this was the law, then in this case, the software would not be copyrighted in Australia and people could bootleg it legally. Adobe would only get copyright protection if they offered it for sale at a fair price.
Another advantage of this approach is that TVs/Films/out of print books are only copyrighted and 'locked up', when they are actually for sale. A film hasn't been released in UK but is in USA? No copyright protected in UK! Force them to release at same time. (NB: an online shop that ships anywhere counts as "for sale in that country")
But instead, there is global copyright without any restrictions.
One copyright reform I'd make, would be removing copyright protection from works like this where are sold as massively different rates between markets. You'd need to look at average wage in the country and compare
Just thought I'd try and run such numbers.
The median Australian household income in 2007-2008 was US $69,085. [1] The median US household income in the Northeast in 2010 was $53,283. [2] So a 31% difference versus the 66% difference in the software's price.
However, the Australian price probably includes GST of 10% which when deducted brings the difference to 51% vs 31%.
So yeah, there's a correction waiting to happen there unless other duties or taxes are causing the problem.
GST is not relevant. The UK has a 20% VAT tax[1] on many things that are substantially cheaper in the UK than in Australia. Legal software is cheaper in Thailand than Australia (where the market for legal software is smaller). The only reason this is happening is because the companies can, and will. Making a profit is why they exist.
Why not get it over with and just nationalize Adobe's products? Make them free for everyone? After all, Adobe takes advantage of the benefits of our free society, and they should give something back for that.
>One copyright reform I'd make, would be removing copyright
>protection from works like this where are sold as
>massively different rates between markets.
Great. When you're done there, can you tell others what to do with the things they've created? Because surely you know better than they do. How about you tell startups what price to offer their software at and how they must license any patents they create?
You act as if copyright is like property rights. Copyright only lasts a certain amount of time, is that "telling others what to do with the things they have created"?
There is no end of law about how companies can sell things, what they can/can't charge for (e.g. minimum warranties). Are you as outraged over that?
AFAIK the basic cost of living and salaries are higher so is this really a problem?
Its the opposite of people moaning that people in some 3rd world countries earn so little but this isn't usually a problem as every day essentials are actually much cheaper.
There is a parliamentary committee currently looking into this disparity in pricing: http://news.cnet.com/8301-1001_3-57568633-92/apple-microsoft...