Software Price Gap Between the US and Europe

Kensai7 writes "A quick comparison between same versions of mainstream software sold in the USA and the EU markets show a big difference in the respective price tags. If you want to buy online, let's say, Adobe's Dreamweaver CS3, you'll have to pay $399 if you live in the States, but a whopping E570 (almost $900 in current exchange rates!) if you happen to buy it in Germany. Same story for Microsoft's newest products: Expression Web 2 in America costs only $299 new, but try that in Italy and they will probably ask you no less than E366 ($576!). How can such an abyssal difference be explained? I understand there are some added costs for the localized translated versions, but I also thought the Euro was supposed to be outbuying the dollar. Where's the catch?"

Comments

Because they can

[Shadow of Eternity]

There's no complicated reason, companies charge more for products in europe because they can.

Re:Because they can

[houghi]

You could almost say that in Europe people purchase new technology for the sake of technology, while in the US people view technology as mere work tools.

So you are saying that the newn things you implement are useless?
One could also say that Europe sees the advantage earlier while Americans stick with what they have for better or for worse.

Re:You answered your own question

[Kiffer]

I see... so why does it still cost stupid prices in Ireland and the UK where little or no localisation needs to be carried out?

Real question: Why can they?

[BadAnalogyGuy]

The reason is that the companies create artificial monopolies by creating sole distributorships in each country. On top of that, name/brand recognition goes a long way in semi-First World countries like those in Europe, so something like DreamWeaver is going to gather a lot more interest than XMLSpy (or what have you). So you have a market focused on one product, and only one supplier of that product. The math is pretty simple; consumers lose out to asymmetric market forces.

It's not just "because they can", but it's actually the market that has created those conditions. If Europeans would wake up to the alternatives (like China and India have), software prices would be much more reasonable.

Re:Real question: Why can they?

[MagdJTK]

Semi-first world countries? Just goes to show how out of touch Americans really are with the rest of the world.

Re:Real question: Why can they?

[ClaraBow]

semi-First World countries

I would argue that the United States has become a semi-First World country. We have lost our manufacturing base, our strong middle class is rapidly diminishing and the gap between the poor and rich is widening.

Re:Real question: Why can they?

[roguetrick]

I would argue that "semi-First World country" is a monumentally stupid phrase, so add our failed education system to that list.

Re:Real question: Why can they?

[Khazunga]

Europe really is a decade or two behind the US economically.

Europe is economically much different from the US. It's not behind the US in any way. Per-capita GDP in the US is in the low 40kUSD range. Per-capita GDP in the EU was above 40k dollars before the ten-country admission in 2004 that included lots of former soviet states. It is now lower, (35k if I recall correctly) but will naturally correct as the EU absorbs the former soviet republics (which had staggering low productivity).

Europe is different. More bureaucratic, with softer growth surges and almost no recessions on record. I don't know if it is better, but it's definitely not a worse economic environment.

It's mainly because they blew all their infrastructure up in WWII[snip]

The Marshall plan took care of this in two decades time. Great effort by the US btw, and definitely the kind of diplomacy a modern capitalist society should use and abuse (instead of classic brute-force-diplomacy)

, but also because of anti-competitive protectionist legislation.

The EU abolished most protectionist legislation between countries in the EU. Intercontinental protectionism is on par with the US.

"Semi-First World" may be an overstatement, but there is some truth to it.

The only revealed truth is that the author couples a sense of superiority with major ignorance about the rest of the planet.

Re:Real question: Why can they?

[SlashJoel]

Some American famously said "I may not like what you say, but I'll fight to the death for your right to say it"--a principle that many Americans hold dear.

I wonder how all those Americans will feel when they learn that the famous American who said that was Voltaire, a Frenchman...

Re:Real question: Why can they?

[Iloinen Lohikrme]

No no no! You are basing your opinion on PPP, purchasing power parity, that is totally useless way to measure economies. The right way is to use raw money that is GDP nominal. So the right source that we should be looking is the list of countries by GDP (nominal)

Unfortunately some asshole has removed once again EU from the list and other idiots are using PPP figures in the article telling about the economy of the Europe. Fortunately GDP nominal per capita can be found from the article about the European Union.

Here is short list of countries. It includes besides USA, EU and Japan notable EU countries below US GDP per capita and EU countries over the US. What can be seen from this list is that European countries in general have been gaining against both USA and Japan and some small countries have leaped over them. If we would have more recent figures that would take into account the decline of US dollar the numbers would favor even more European countries. So all in all, by GDP per capita nominal, we can conclude that all the countries in the list are more or less first world countries.

• $104,673 Luxembourg
• $59,924 Ireland
• $57,261 Denmark
• $49,655 Sweden
• $46,602 Finland
• $46,261 Netherlands
• $45,845 USA
• $45,575 UK
• $41,511 France
• $40,415 Germany
• $35,872 Italy
• $34,312 Japan
• $33,482 EU

Re:taxes

[EvilIdler]

Taxes are still not 130% on top of the RRP ;)

Re:sheesh

[cliffski]

you realise all the stuff on there is only made because they rely on honest people buying copies right?

You might think its cool to just leech off of honest people, but some of us would have a real problem with that.

or did you think pixies from outer space made all the software?

Its the way they convert

[Joker1980]

In the last 5 to 10 years the conversion has usually gone something like:

$1 = £1 = 1 Euro
Nice and simple just the way they like it.

Hassle factor

[Spazmania]

The governments of Europe hassle companies (in general) more than the US does. This hassle has a cost. The cost is reflected in the price.

Let me put it another way: Adobe considers it worth their while to sell Dreamweaver at $400 in the US. After all the hassle, they consider it worth their while to sell Dreamweaver for $900 in Europe. At $400, would it be worth their while to sell Dreamweaver in the EU at all? Maybe not.

Let me put it a third way: go on eBay and you find that a lot of US sellers won't ship outside of the US and Canada. Why not? Because it isn't worth the hassle. Would it be worth the hassle if the seller could check a box which said, "double price outside North America?" Maybe so.

Single data point

[iaamoac]

Don't get your knickers in a bunch just yet over the price difference. What we have here amounts to a single data point in time.

Perhaps a better question to ask first is "How has the price of software in Euros changed over the last couple of years?"

Why ask this? You are converting prices back to US dollars. The value of the US dollar as compared to Euros has been declining for the last couple of years.

IF the price has been relatively steady (I don't know if this is the case), and people are comfortable paying this price, there is less incentive for US companies to lower the price of their software in Europe. If the Euros are converted into US dollars, they would be keeping more $$$. It's their software, they can charge what they choose.

This only addresses part of your question. Since one US dollar has been worth less than one Euro (at least for the last five years), the price at any point in that period (assuming a relatively constant Euro price of software), would still be higher.

There is probably some holes in my reasoning, but I am sure smarter souls will be more than happy to correct me.

Nothing new here

[metamatic]

Back in the 90s on Usenet I used to tabulate and compare prices between MacWarehouse's UK and US catalogs. I'd subtract the VAT to ensure the comparison was fair. The result showed markups of 50-100% on a regular basis.

In most cases, any localization done was incomplete. For example, ClarisWorks still referred to "color".

As I recall, the #1 winner was Dave Winer's Userland Software. Their Frontier product had something like a 200% markup in the UK, and zero localization performed.

I actually contacted some of the winners about their UK pricing. One company told me that the markup was because a small number of distributors controlled the UK software market, and those distributors were the ones setting the prices.

It's worth noting one of the side effects of this practice: my experience in the 90s was that everyone ran the US version of Mac OS and ordered their software from the US in order to save money. This indirectly killed the market for Mac software in the UK.

Also, the BSA used to estimate software piracy by comparing the number of people running (say) Microsoft Word with the number of UK sales of Microsoft Word. So the gray market meant that US piracy stats were depressed, and UK piracy stats were artificially inflated.

(I was going to link to some of my 1992 Usenet posts, but Google Groups doesn't seem to have them.)

Re:Nothing New

[drsmithy]

Actually, these price diferences are true not only to software but hardware as well. And the value has nothing to do with the versions being localized.

In fact, the price difference applies across the board. Pretty much everything in American is just dirt cheap.

(Which is why, when we're passing through the US lat this year, we'll be arriving with two empty suitcases each and leaving with them stuffed full of clothes, electronics, and the like. The money saved over buying in Europe or Australia will pay for a non-trivial portion of the trip.)

They're simply boosting profits

[thetoadwarrior]

That's just as much BS as their old excuse for shipping things to Europe despite being closer to China where all the electronics are actually made and Microsoft makes their EU discs in Ireland so the cost is minimal for shipping.

As far as translation...for starters they never actually give you software that uses British English so we see no benefit in it and do you think they get "file", "save", "copy, etc translated for each version? A previous employer of mine only paid approx. £110,000 to get a whole book translated into about 26 languages. It was a small company so they certainly didn't get a good rate. Now if Microsoft or Adobe somehow pays double that, that means they only have to add £1 per disc if they sell 220,000 copies which they will. There is no excuse for something that should cost us £150 to cost £300 (or more).

The only reason they do it is to boost their profits because European currencies are worth more than the dollar. So they abuse their positions to sell over priced software to help their bottom lines. That's the only reason.

This is also yet another reason why I use products like Open Office and Gimp. Honest companies, like JCreator, will get my money too seeing how they don't try to rip me off for not living in the US.