Aussie Parliamentary Inquiry Into Software Pricing Announced

New submitter elphie007 writes "Australian consumers may finally see the end of being overcharged for software simply because they live outside the U.S. Minister for Communications Senator Stephen Conroy (champion of Australia's National Broadband Network) is reported to be finalizing the terms of reference for a parliamentary inquiry into software pricing in Australia. Last week, Adobe announced Australians would be charged up to $1,600 more for Adobe CS6. With the ongoing strength of the Aussie dollar against the U.S. dollar, Australians should really be paying less, not more for software & music purchased online."

Comments

Prices are what the market will bear

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We Australians pay high prices for a simple reason - our market can bear the prices. The strong Australian dollar coincides with higher wages and costs of living, and any professional who needs photoshop will buy it, albeit begrudgingly. Adobe provides discounts for students and other groups, but the prices are still quite high.

This is basic economics: charge as much as possible to each customer, also known as price discrimination.

The same goes for "luxury" cars. Let me give an example. Here in Australia a new BMW M3's recommended retail price is $154,000 AUD. In the US, it is around $60,000 USD. Government taxes, extras, shipping costs, etc only account for a very small percentage of this difference. How does BMW sell any cars in Australia? Enough people are willing and able to pay the price.

Re:Prices are what the market will bear

[bertok]

It's not just the tariffs or the taxes. How do you explain that even cars made locally in Australia cost more than the same model in New Zealand? They have shipping costs, taxes, and tariffs too, yet a locally made car somehow costs more here!

I just found an informative page for importing a car into Australia. It has a worked example for importing a car worth $56K into Australia. The total payable tax plus tariffs is $11.5K. Doesn't exactly account for a BMW going from $60K to over $130K, does it? Where the hell did the other $60K increase in the price come from?

I once worked as an IT contractor for a car importer that had an exclusive deal with a manufacturer to import cars into Australia. I asked one of their senior staffers why cars were more expensive in Australia. He basically admitted that all of the importers jack up the price because they have an effective monopoly position (for their brands), and can get away with it. There's a sort of gentleman's agreement between them to maintain this status quo and not compete on price. This works because importers often import several brands, so there's only a few of them catering for the entire market. It's not the taxes, the shipping, the retailers, or the manufacturer. Nameless middle-men obtain exclusive rights to import, and then milk the market for everything that they can.

It's blatantly obvious if you know what to look for. For example, I wanted to get a nice sporty car, like the Nissan GT-R. Here in Australia, it's over double the cost of what it is in Japan or in the US. I worked out all the taxes, and it still didn't explain most of the difference. I looked into importing one direct from Japan -- I'd still have to pay all of the Australian taxes and tariffs and pay an additinal overhead for organising the whole thing, but the end result would still about 30-40% cheaper. However, it turns out that I wouldn't be be able to get my imported car serviced! The "official" importer also controls all of the parts and servicing, and they'll refuse to do business with you if you own a "grey" import. You can have it serviced elsewhere, but with a small-volume model like the GT-R, it's a risk. Compare that to, say, buying an iPad in America. Apple will repair it for you in Australia happily.

There's no way to do the equivalent in America because the market is too big, there's too many importers, and hence there's enough competition to prevent a successful collusion from forming.

This is why I don't buy anything except food and clothes from local retailers any more. I get all my gadgets and software online. Lots of other Australians shop online from overseas too. It's probably harming our local businesses, but fuck them and their greedy price gouging.

It's about time the ACCC started investigating this. First software, then I hope they look into cars next...

Re:To be fair

[the_B0fh]

jesus. no matter how stupid the topic is, you can find an apologist for it. Here're the rebuttal points:

1) USA is the most lawsuit happy country in the world. If the company can do business in USA, and the price covers the cost of lawsuits, then the same price will cover the price of lawsuits in Australia.

2) WTF are you smoking on development taxes? *NOBODY* pays fucking taxes on writing software, only on selling it. If you are talking about salaries of developers and so on, then shouldn't there be a *DISCOUNT* since it's so much cheaper to develop it elsewhere?!

3) I guarantee you Adobe has already figured out the taxing regulations previously, and it's fucking sunk cost. The cost of figuring out the tax regulations (as a delta against US tax regulations) do not recur yearly. If there are changes, it's the same kind of changes that happen in USA, and obviously Adobe USA can handle it, so why can't Adobe Australia?

You're full of shit.

Re:To be fair

[nedlohs]

As for the strength of the Australian dollar, that is purely a rubbish argument, because US companies typically price their software in US dollars, and let the exchange rate take care of itself.

They clearly don't. 10 years ago the AUD was worth US$0.50, now it's worth US$1. Software prices in Australia are not 50% less than they were (relative to US prices).

For example Office Professional Edition 2003 was announced at US$499 in 2003 in the US, but at AUD$899 in Australia. The AUD was worth USD$0.65 at the time. So the Australian version was USD$584 and USD$53 of that is GST giving a $32 or 6% premium over the US price which no one complained about since that's reasonable.

Now Microsoft Office Professional 2010 (2 PC/1 user version) is AUD$849 in Australia. It is USD$499.95 in the US. The AUD is currently worth USD$1.05. So the Australian version is USD$891 of which USD$81 is GST giving a USD$310 or 62% premium.

Notice even though the AUD has increased in value by about 60% in that time frame the relative USD/AUD prices have essentially remained unchanged (wooho a $50 reduction in Oz).

Australians wish they priced in USD, since then prices would have fallen by almost half over that time frame.

So how do you explain a 6% premium turning into a 60% premium? What massive changes product liability and taxation systems do you think happen in Australia?

Australia has a GST tax. Just figuring out if you are liable for this will cost you a bundle. Collecting it and dealing with it from Chicago will cost you more in terms of staff time, and hiring work done in Australia.

Oh sure. It's real hard. If you are you selling it in Australia then you add 10% to the price and send that in to the government. If you are selling it outside of Australia then you do nothing. Wow, that's so complicated! All software qualifies for the GST making it even simpler to work out.

Re:To be fair

[Anonymous Coward]

We don't want your soldiers. Take them home.

- Regards, The World.