Over priced and over here

Here's a Pentax lens at big UK retailer.  £629.99 ; and here it is at big US retailer $689.95, less a $100 rebate - net price $589.95.  With the pound trading at $1.967, my sister in California can buy it for under £300.

Stuff costs more in the UK than the US. For example an Xbox 360 $399 (£200) in the US, and £275 in the UK. Some products have localization costs (different manuals, safety stickers, cables etc). UK dealers work to higher margins. UK distribution costs are higher. There are taxes (e.g. 8% duty on lenses) and of course VAT which alone accounts for half the difference in X-box prices, but when I'm paying more than double I feel that someone somewhere is taking the Mickey Bliss.

Some friends of ours recently started a book shop and they have been having the same thing with some books which carry the US$ price on the cover; there's no VAT on books, nothing to localize, it's margins and distribution costs.  Here's a snippet from their blog. 

A phonecall to the wholesaler says "we charge the full UK currency equivalent to cover the costs of getting the book over from the US" ..... How did you bring the book over from the US? In a sponsored canoe, one at a time?

"In a sponsored canoe ??! " will enter my library of phrases.

Comments (4)

  1. Anonymous says:

    Or what happens when you throw stones in a glass house. My post on over priced and over here attracted

  2. James ONeill says:

    Ian, all helpful comments.

    Distribution in the US is cheaper, economies of scale negate the effect of distance. An operation like Pentax could serve the whole of Europe from one distribtuion centre, but the chain seems to be bring them to Germany, then to Pentax UK, then to Intro2020 (the UK distributor). Transport is cheaper per mile thanks to bigger trucks and lower fuel costs (Americans can’t beleive)

    Yes American prices are quoted without tax and British ones with tax. As you point out US sales taxes are lower, and not paid if you’re buying on the interent from out of state. Adding VAT, which you have to do on a personal import doesn’t get anywhere near accounting for the difference.

    You’re right about 6.7% –  I checked HM revenue and customs and found my memory was playing tricks

    I found out about Parcel Force’s admin charge when they brought a wetsuit through customs for me. Customs charged £0, parcel force rather more. And since I always end up going to the Depot I prefer UPS which is a 10 minute round trip, to PF which takes an hour.

    I think Mark’s original point may have stemmed from Exchange rates; and whilst I wouldn’t expect prices to go up and down on a daily basis and review once or twice a year would make sense.

  3. Mark Thornton says:

    Hi James – we got several emails in response to that post – no-one wanted to go on the record (or at least ‘on the blog’) – but like everything in life, the Internet is undercutting and undermining what is in effect an artificial market barrier (a bit like cars a few years ago).

    We’ve been given a good tip-off from two booksellers about where to source US books, and and as you might imagine the Internet plays a key role…

  4. Ian says:

    I fail to see how a country the size of Britain can have higher distribution costs than a continent size country like the US!  Also, the US tends to quote prices excluding sales tax in stores, so your sister would probably pay an extra 10% or so on that $690 price if she bought it in a shop.  Of course, you can buy it yourself too, with this here interweb thing, and you’ll be exempt from that sales tax.

    But I think the xbox difference is more likely due to exchange rate fluctuations, as even taking the $400/£275 as the final price, that gives a ratio of 1.45 – certainly, an exchange rate within living memory, and you wouldn’t reasonably expect Xbox prices to rise and fall with the markets.

    I’ve imported several items from the US, mostly things that are unavailable (estoric CD players) or prohibitibively expensive here (domestic robots), and despite finding the concept of a limited edition lens somewhat disturbing, you might find this page interesting.  http://ec.europa.eu/taxation_customs/dds/en/tarhome.htm  (It seems to indicate that lenses have a duty rate of 6.7%, not 8%.)  If it arrives via Parcelforce, they will charge a handling fee, so you might want to bite the bullet and go for a slightly more expensive shipping option.

Skip to main content