Time for Apple to cut us a break on the Watch
28 September 2015 | 0
Good news for fans of the Apple Watch, it’s finally arrived in Ireland. The bad news is that the pricing is pretty steep and no matter how Apple spins it, there’s no getting away from the fact that people on this side of the Atlantic are being charged a pretty hefty loyalty charge to buy the product.
The entry-level Apple Watch Sport costs $349 in the US. Using a New York zip code, I found that once you add in the sales tax, the price of the watch increases by about $50 to just over $379. If you convert that to euros, you’re looking at a price of roughly €339. Now, admittedly, the sales tax for New York is lower than Ireland’s VAT rate but even if you added 23% VAT to the US price, the true cost should be $429 or €384. The actual Irish price, however, is €45 higher at €429 (which converts to $479). If you like to look at these things in percentage terms, the Watch Sport is more than 10% higher than it should be.
The mark-ups apply pretty consistently across all the models in the Watch Sport and Apple Watch ranges (I didn’t bother with the really high end model). So a 42mm Apple Watch Sport costs $399 and $434 with sales tax. If the pricing was consistent, it would cost €438 ($490) in Ireland but the price here is €41 more at €479.
The 38mm Apple Watch retails for $549 in the US ($597 with sales tax). The price in Ireland with VAT should be around €604 ($675) but it’s 12% higher at €679. The 42mm Apple Watch costs $599 (just over $651 with sales tax) which converts to $737 (€659) with Ireland’s 23% VAT. But Apple is charging Irish customers €729 for the watch instead, a mark up of just under 10%.
Some of the more eagle-eyed among you may have noticed a certain similarity between the overall dollar price if you combine Apple’s US prices with the Irish VAT rate and the figure the company charges Irish customers in euros. So the entry-level Apple Sport Watch would cost $429 if you combined the US base price with the Irish VAT rate but costs €429 here. The combined price for a 38mm Apple Watch would be $675 but it costs €679 in Ireland.
As a side note, you might also have noticed that UK prices are slightly cheaper than the Irish ones at the moment.
Anyway, what the comparisons demonstrate is that we could almost be back in the bad old days of taking the $ sign from in front of the US price and putting a € sign in its place. How do US companies like Apple justify these mark ups? It’s not as if there’s the extra shipping cost to the vendor that there would be if the watches were being built in the US and shipped here. Nearly all devices are now manufactured in China and then shipped to the US or Europe so there’s really no excuse for a whopping 10% price differential.
Which leads to an interesting question: if people in Europe are paying significantly more for products than their US counterparts, are they being charged more to subsidise prices for US users or are vendors like Apple merely profiteering at their expense?
Apple Watch Sport 38mm
New York $349 with tax is $379 = €339
With Irish VAT = $429 (€384)
Irish price €429 = $479
UK price £299 = €406 = $454
Apple Watch Sport 42mm
New York $399 with tax is $434.41 = €388
With Irish VAT = $490 (€438)
Irish price €479 = $535.35
UK price is £339 = €460 = $515
Apple Watch 38mm
US price $549 with tax $597 = €534
With Irish VAT = $675 (€604)
Irish price €679 = $759
UK price £479 = €651 = $727
Apple Watch 42mm
$599 with tax $651.41 = €598
With Irish VAT = $737 (€659)
Irish price €729 = $814
UK price £519 = €705 = $788
Conversion rates on 25/9/15
$1 = €0.89
€1 = $1.12
£1 = €1.36/$1.52