On Friday, Apple (along with Microsoft and Adobe) will front the Federal Australian Parliament’s inquiry into IT Pricing. You may recall that after failing to voluntarily appear, the committee in February of this year summonsed the three, effectively forcing them to appear. Given Apple’s appearance, I wanted to take a closer look to see what Apple actually charges for their products (both hardware and media from their iTunes and App Stores) and see how it compares to the US.
Doing this kind of analysis can be fairly contentious given there are a few ways to do it, various assumptions you have to make, and different ways of presenting the information. To be clear, here is how I have constructed the data presented in the graphs in this article.
- I collected from Apple’s website, the Australian and US prices of all their key products and main models (but not built-to-order models).
- GST is removed from Australian price: The Australian price includes a 10% GST (goods and services tax), so I removed that from the Australian price because US prices do not include a sales tax, that is added at checkout based on which US state the customer is from (sales taxes varies across US states).
- Now that both prices don’t include sales taxes, I convert the Australian price from Australian dollars (AUD) to US dollars (USD). I use a 3 month average of the exchange rate. The 3 month average smoothes out any temporary peaks or troughs in the exchange rate and gives Apple a fairly lengthy period of time to alter prices if there was a significant change in the exchange rate.
- This now gives me the price of the Australian good in USD and without GST, a figure that can now be compared with the US price. So I calculate the percentage markup of the Australian price based on the original US price.
- NOTE: Methodology for the Media calculations do vary a bit, read the notes I include with them.
- I encourage you to scrutinise my calculations by taking a look at the Excel document I created, linked below.