Apple Price Index: How does Apple product pricing differ around the world?
If you live in the US, Canada or Japan, I can assure you that you will be pleased to know you’re getting bang for your buck! Apple products are sold all around the world but they aren’t priced the same. You can save a couple of hundred dollars on the same item if you happen to be traveling to one of those countries (in post-COVID times ofcourse!).
Before we start reviewing and comparing, we must know why the same products differ in prices in different countries?
An average consumer would assume the price of a common electornic good such as an iPhone in one country should be equal to price in any other country. However, in the real world, the principles embedded into this rule do not hold, and significant price differential exists for certain forms of products and resources.
Some of the key factors contributing to price dispersion include regulatory costs, foreign exchange rates, consumer protection laws, import and sales taxes, transportation, employment law and several other industry factors. Local market needs and differences in the competitive landscape might also contribute to the price variation. This theory isn’t only applied to Apple products, but to almost all products that are consumed globally. The most prominent ones being automobiles, luxury handbags, white goods, etc.
The waterfall below shows an example break up of an iPhone that retails for USD 850. Assuming Apple’s cost of producing the phone is USD 600, including their direct costs, R&D, marketing, advertising and margin.
Selling this USD 600 iPhone around the world would require tailoring the product to the local market. For example, European consumers get a two-year warranty whereas the rest of the world gets one year warranty. This would come at a cost which will be passed through to European consumers. Taxes are also crucial to determine the final retail price – in Hungary, sales tax (or VAT) is around 27%, one of the highest in the world.
More specifically, the price of an iPhone XR (64GB) is the lowest in US and Russia, where it costs approx USD 813 – 823. If you want to get the same phone from Romania, you’ll be forking out USD 1,373! Shocking right? You can almost buy two phones in the US for the same price as one phone from Romania!
After all, comparing apples to apples is not a simple task.
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While we strive to provide you with up-to-date information, prices and currency exchange rates may be different at the time of reading. Head to Apple’s local stores for current prices and check the exchange rate beforehand.
