A recurring bogeyman in the computer industry is the age-old practice of US companies gouging European customers by charging significantly more for their products than they do in their home markets.
The most recent and outrageous example is Adobe which, according to The Register, is charging European users almost 100% more for Creative Studio 3 than it costs in the US. I won’t get hung up on the detail but there’s an exhaustive analysis of Adobe’s pricing at the following link: http://www.amanwithapencil.com/adobe.html. Adobe’s only defence in public so far has been to issue a statement to the effect that “the costs of doing business in European markets are significantly higher per unit of revenue than in the US”.
The company added that it had “a long history of serving our customers in local markets the way they want to do business”. As Americans are usually caricatured for ‘not doing irony’, we have to take Adobe’s statement at face value and accept that Europeans must, as a group, believe that being ripped off is “the way they want to do business”.
To a certain extent, we probably do. Down through the years, many US companies have been able to get away with simply swapping the dollar symbol for a euro or pound sign on European price tags and leaving the figure that comes after it unchanged. By way of a lame defence, American companies have frequently argued that prices appear worse than they are because of short-term currency fluctuations and that they simply cannot keep changing their prices every time the dollar slips against the pound or euro because, otherwise, they would have to change them back again if the dollar went the other way.
Pricing, argue the Americans, would be very volatile and the distribution chain would be adversely affected.
But if that argument has any logic, then it’s odd how many US companies have raised their prices in Europe in the past whenever the dollar has gone up significantly. Too often, they appear willing to cream off the bucks when the dollar is low and to make sure they don’t lose out if the dollar goes up.
Essentially, by refusing to lower their euro pricing when the dollar goes down, many US companies are profiteering at the expense of European users, making more money on the sale of the same product. It might be different if they were paying more for the components used in a product because of the weakness of the dollar but, as I understand it, most of their purchasing is done in dollars so it makes no difference. In fact, their costs are less, relatively, as a result. Also, because they translate the foreign earnings they make into dollars, their profit from overseas sales goes up when the dollar goes down.
If there were a level playing field and European users were really paying a fair price for the product, then logically US prices would go up in periods when the euro and pound were strong against the dollar for a significant period of time. This never happens, which suggests US companies may be using higher relative European pricing to subsidise US customers whenever the dollar is weak.
Essentially, we pay more for the same product so that US customers don’t have to.
European companies that resell US products also end up paying more because they are locked into an artificial market where the price they pay for the product remains the same irrespective of currency fluctuations.
This is a great example of a supply chain where the benefits of lower costs don’t get passed down but are guzzled up by the people at the top. Apart from the occasional eruption of discontent down through the years, nothing ever gets done to try to reduce the pricing differential for US goods in Europe.
The EU authorities appear completely disinterested. National governments and consumer bodies remain silent. The only people who seem to get exercised about a drop in the dollar are the newspaper feature writers and airlines busy telling you how much you can save by doing your shopping in New York. In other words, if you want a good price for a product, you have to spend your money in the US – because you sure as heck won’t get it at home!
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