Thursday, June 08, 2006

Different prices of a same item all over the world

Apple 4GB iPod Nano

New York City: $249
Buenos Aires: $592 (1,799 Argentine pesos)
Cape Town: $321.77 (1,956 rand)
London: $286.802 (152.34 pounds)
Moscow: $299 (8,074 rubles)
Paris: $295.80 (231.61 euros)
Shanghai: $299.74 (2,400 renminbi)
Tel Aviv: $371.68 (1,649 shekels)
Tokyo: $248.83 (27,800 yen)

Coca-Cola Classic

New York: $1
Buenos Aires: $0.65 (2 ARS)
Cape Town: $0.73 (4.55 ZAR)
London: $ 0.77 (0.41 GPB)
Moscow: $1.41 (38 RUB)
Paris: $0.82 (0.64 EUR)
Shanghai: $0.44 (3.50 CNY)
Tel Aviv: $1.12 (5 ILS)
Tokyo: $1.36 (150 JPY)

Marlboro Reds

New York City: $7.30
Buenos Aires: $1.15 (3.50 Argentine pesos)
Cape Town: $2.38 (14.70 rand)
London: $9.74 (5.14 pounds)
Moscow: $1.08 (29.17 rubles)
Paris: $5.45 (5 euros)
Shanghai: $1.87 (15 renminbi)
Tel Aviv: $4.14 (18.35 shekels)
Tokyo: $2.73 (300 yen)


Motorola Razr Cell Phone

New York City: $269.99
Buenos Aires: $513.691 (1,559 Argentine pesos)
Cape Town: $195.32 (1,182.16 rand)
London: $243.58 (130 pounds)
Moscow: $300 (8,100 rubles)
Paris: $126.53 (99 euros)
Shanghai: $249.64 (1,998 renminbi)
Tel Aviv: $290.207 (1,285 shekels)
Tokyo: $261.333 (28,800 yen)

Nike Air Structure Triax Sneakers

New York City: $90
Buenos Aires: $98.85 (299.99 Argentine pesos)
Cape Town: $181.59 (1,099 rand)
London: $139.44 (75 pounds)
Moscow: $126.71 (3,420 rubles)
Paris: $113.117 (88 euros)
Shanghai: $89.93 (720 renminbi)
Tel Aviv: $100.73 (449 shekels)
Tokyo: $88.85 (9,815 yen)

Ever wonder why the same products are priced differently around the U.S. and the world? Why does a 4-gigabyte iPod Nano cost $249 in the U.S., but the equivalent of $333.45 in Britain? These are virtually identical products aimed at exactly the same audience, but one costs 33.9% more.

LOCAL ISN'T ALWAYS CHEAP. That Argentinean wine costs more in New York than Buenos Aires should come as no surprise. It has longer to travel and more associated costs in getting it to market. The same applies to oil and auto parts. In general, the closer the product is to its source, the less it will cost.

But that rationale does not apply all the time. Let's look at Apple's (AAPL) iPod again. It is made in China or Taiwan for U.S. and British markets. The costs associated with bringing it to market in either country are relatively similar. So why does one cost so much more?

A lot of it has to with tariffs -- or lack thereof -- which can affect the price. In certain countries, such as the U.S. and Britain, taxes on tobacco sales are high, doubling and even tripling the cost. In other countries, such as China, prices are fixed to hold the cost down for many products. As a spokesman for Philip Morris International wrote: "As with many consumer goods, the prices for cigarettes vary from one country to another. This reflects varying levels of consumer purchasing power in individual countries, as well as in the case of cigarettes, varying levels of tobacco excise taxation. In fact, in most countries tobacco excise taxes are the major contributor to the retail selling price."

NOT JUST TAXES. Another reason is currency valuation. Right now the U.S. dollar is weak compared with many other currencies, so it buys less. The iPod Nano may seem more expensive in some countries but in terms of actual purchasing power the outlay is comparable.

Then there is relative price structure within a country. Generally speaking, this means that for most things prices tend to be lower across the board in poorer countries and more expensive in wealthier nations. This is not always the case. In South Africa, for example, the iPod Nano retails for the equivalent of $321.77, or over $70 more than what the same unit costs in the U.S.

A fourth factor is corporate pricing strategy. According to Angus Deaton, Dwight D. Eisenhower Professor of International Affairs at Princeton University, "companies have a lot of discretion when it comes to setting prices. There is nothing to stop them setting dramatically different prices in different places in order to make the most profit."

In other words, a company will charge more for a product in one market than another because it knows consumers have no alternative. Retailers can also charge more if they feel that consumers will bear the cost.

excerps from http://www.businessweek.com/index.html

-gAvIn-

2 comments:

afhstingray said...

copying straight frm bw is not cool

legal implications

merdeitis said...

u noe, we r students and we dun reli have enuf 'resources' to do researches like this... hence, one 'improvises' just in order to get the information accross to those hu 'perhaps' dun read bw n maybe instead read this blog here (god forbid)...

n i dun think there will be any legal implications seeing as to how we accredit the info to bw below the post in a way actually encouraging people to read bw...

wheter it be cool anot is totally out of the question... what we're tryin to do here is to share stuff that we noe with others... and this just happens to be stuff that we so 'happen' to noe...

-aDRiANo-