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home :: Critical Focus :: Features
22nd September 2007
Critical Focus: Software pricing - it's an international rip-off
by Ian Burley
4320: Critical Focus: Software pricing - it's an international rip-off

Why are we putting up with huge differences in software prices simply because of where we live?

First of all some house-keeping; I've decided to rename this column 'Critical Focus' instead of 'Manual Focus'. It has a better ring about it. But that is all that has changed - you're reading the DPNow editor's weekend soap box. This week, I'm fed up with being ripped-off. The term 'Rip-off Britain' has never been more salient from my view. But to our many visitors from outside of the UK, don't feel this editorial is irrelevant to you - the inconsistency of international pricing extends to you too.

Corel Paint Shop Pro 10 X2 starts shipping next month and we attended the press launch in the UK a couple of weeks ago. Several of us quickly realised at the event that there was something very strange about Corel's pricing. The UK suggested retail price was £79, while the continental Euro price was only €89. Why is that strange? If you do a straight Pounds Sterling to Euro conversion of £79, the exchange rate as of today is €1.43 to £1, so £79 should convert to €113. It seems our continental friends enjoy a 27% discount compared to the UK price.

But before Euro fans get too excited, further investigation shows that they, in turn, lose out heavily to the price paid in the US. This is all very perplexing as UK Pound is very strong at the moment. It should mean imports to the UK should be cheaper, especially against the US Dollar. Corel is a Canadian company, but its business, like most of the big software brands is basically conducted in US dollars. So why are we in the UK forced to pay £79 ($160) when the price is only $99 in the US?

Corel Paint Shop Pro 10 X2 pricing in the UK, USA and Continental Europe compared:

  Local price Converted to Pounds Converted to Euros Converted to US Dollars
UK £79 - €113 $160
Europe €89 £62 - $125
USA $99 £49 70 -

UK and European prices include VAT

It's true that we pay a lot of VAT here, 17.5% in the UK, but even if you remove that, the UK price remains 36% higher.

I collared a senior Corel exec after the launch presentation for an explanation. From his point of view it boiled down to: "It costs more to do business here in the UK". I asked him if this was because of the relatively few high-street multiple store groups demanding higher margins; he didn't try very hard to deny this.

Is Corel's pricing policy a blip? Alas, no. Last week I attended the launch of Nero 8, the popular CD and DVD multimedia authoring software suite and once again, the Euro price was significantly lower than the UK Sterling price - and Nero 8 is produced by a German company.

So is it a de facto reality that software will be more expensive than it seems it should in the UK? Not necessarily. Some US companies do price their software internationally in line with exchange rates, however, US resellers are often more competitive when discounting. You can buy Adobe Photoshop Elements 5 for as little as $36 (£18) in the US compared with £49 ($98) in the UK, for example.

But, with some luck, you can come out quids-in (apologies to our overseas readers - this is slang for doing a great deal). I recently sought to buy a licence for TechSmith's Camtasia screen recording software, bundled with their SnagIt screen grab package, which is priced on their Website at $319. What a surprise, but their ordering system requested my country of residence and the resulting price was £212.50 ($429). Even with VAT removed, the effective price I was being asked to pay was $365, $46 (14%) more. I emailed TechSmith for an explanation and for a reason why I couldn't order from them at the US dollar price. A couple of months later I'm still waiting for a reply. But the I had the last laugh, this time. Determined not to be ripped off, I scoured the Net for a better deal and I found it. WebNomad, a UK reseller, supplied the goods to me for £154 ($312, excluding VAT), which works out cheaper than the official TechSmith US price. It's down to £150 if you're interested...

And I haven't even touched on hardware pricing.

 

 

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