back to article Brits lose out as iTunes prices jump

Most stories covering Apple's international price rises have focused on the base price - up from 59p to 69p in the UK, a rise of 16 per cent or so - the increase is higher elsewhere. Case in point: readers buying comics through iPad apps and who used to pay around £1.19 per issue will now pay £1.49 - a 25 per cent price rise. …

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VAT

I think a significant portion of the difference between US and UK prices is UK VAT.

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Not VAT

...VAT was applied before the price rise, and even then the increase in the UK is only 2.5%. Add 4% inflation - you're looking at a 6.5% increase. Factor in the exchange rate stuff - lets be generous - 2% in our favour, so 4.5% would have been a realistic increase.

Not 16%.

No...price rise more likely to be due to Steve Jobs needing a solid gold bath for his 5th mansion.

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Anonymous Coward

VAT part 2

..and just to clarify:

59p before in the increase included UK VAT

69p after the increase also includes UK VAT

VAT went up 2.5%. Apples increase is 16%.

There is no US vs UK VAT arguments to be had here...

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Anonymous Coward

@AC

No one is saying the increase is only due to VAT! The actual reason stated in the article was a currency exchange update.

The exchange rates for app store purchases hadn't changed since 2008. But on top of that there's the VAT increase as well.

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Allowing for VAT...

... UK prices are actually cheaper. 69p - VAT = 57.5p. 57.5p converted to USD is 92 cents. The 99 cents doesn't include sales tax because there is no national US tax; if you live in a state that collects tax on digital downloads then it'll be added to the $0.99.

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WTF?

Inflation of 3-4% my a***

The real inflation is 15%+ just as in this case. Same as with gas and countless other things.

It will get even funkier as we go along as EU approaches its "Argentina moment" in Q3 when Italy will follow on the stalwart examples of Portugal, Ireland and Greece.

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Holmes

What he said

In this particular case, it looks like VAT might be making the difference.

That is not to say Apple's prices have not assumed some mythical currency in the UK that is at parity with the USD in the past.

But if the price 'should be' 1.25 GBP and is actually quoted as being 1.50 GBP, that is exactly the kind of 20% increase that you might expect to see if for example VAT were set to 20%.

In the US people are used to seeing prices advertised before any sales tax is added, and since these taxes are local to the State, County and even City in come cases, I suppose this makes sense. But in the UK, prices are always quoted inclusive of all applicable tax (by law, no less).

So in the US you see something on sale as 1.99 USD, but you might pay anywhere between 1.99 USD and 2.25 USD or so for it. In the UK you see something advertised as 1.49 GBP and you will pay 1.49 GBP.

And long may it continue to be so.

Rip-off? Not in this case, I think.

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Just one thing

iTunes EU Sarl is based in Luxembourg, so they charge 15% Luxembourg VAT not 20% UK VAT.

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Anonymous Coward

Luxembourg

But don't companies have to register and charge at their customers rate after a threshold?

"If a business makes sales to a member state that exceeds that member states distance selling threshold (typically either EUR 30,000 or EUR 100,000) then it must register to pay VAT in that member state and collect VAT at that member state's VAT rate."

from http://en.wikipedia.org/wiki/Taxation_of_Digital_Goods#Businesses_located_with_an_EU_member_state

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re: Just more thing

I believe that the VAT is charged at the rate of the country of purchase but happy to be corrected.

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VAT headaches

Think its more complicated - something about selling over the internet (which I assume is technically true for app store-esque purchases) within the EU/EC - you get to register in one country and charge IT'S rate of VAT for sales to consumers within the EC. This is why they are located in Luxembourg for its low rate of VAT (and why its European HQ is located in Ireland with a cross charge to get the low rate of corporation tax). I think Luxembourg also has some silly exemption which makes it lower than 15% for these kind of sales. Whole thing changes in 2015 (at which point expect ITunes to get straight out of Luxembourg....)

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ES

£1.24 dollar conversion * 1.2 vat = £1.49

doh

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It's all in the VAT

Not that I like paying more than anyone else.

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Inconsistent

Seems inconsistent. Quick look through my wish list reveals that:

The Elements, for example, went from £7.99 to £9.99.

iMovie went from £2.99 to £2.99... no hike there at all, wonder why.

There are other examples too - some things are the same price and some things have jumped up.

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I expect

The developers set the sale price for their apps, so I expect they've also had input on these price changes.

For example, a £0.59 app would have bagged the dev £0.34 once VAT and Apple's cut are taken off, at current exchange rates that's $0.55, which is a good chunk less than the $0.69 they would get from selling the same app at $0.99 in the US store.

Raising the price to £0.69 changes the figures to £0.40/$0.65.

I guess the choice is down to a number of factors, but ultimately Apple only set the price points, the devs pick which one they use.

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re: Inconsistent

Quite.

An app that cost £7.99 costs £9.99 and is a 25% hike - whereas the price level below (£7.49) has gone up by 20% (£8.99) and the one above £8.99 has increased by 16.7%.

Although the price band that Final Cut Pro X is on has seen a smaller percentage rise, it now costs an extra £20 ( £179.99 to £199.99).

Changes for all price bands can be found at http://www.tapmag.co.uk/blog/apple-increases-uk-app-store-prices-14-07-2011

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re: I expect

"The developers set the sale price for their apps, so I expect they've also had input on these price changes"

So far, all the comments from developers that I've read, have claimed these changes came out of the blue - the closest to discussing it with developers seems to have been Apple letting them know that the system would be down for 'maintenance'.

Although developers do control what price level their apps sell at, most say that otherwise it's out of their control at it's Apple who sets out the price levels (some say it's similar to Amazon etc.).

Most of the UK developers' comments I've read, seem pretty supportive though.

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Vat rise?

Whilst there may be a striking correlation in the % rise the the current VAT level, I assume the previous price included VAT, so the raise should only be 2.5% increase if that was the explanation. Sounds like some sneaky double dipping, or just them not understanding UK Tax.

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$1.99 is £1.48 after currency conversion + VAT

So Apple are making a whole 1p extra by "over charging" us (according to Google's currency conversion rate)

Oh the humanity!

These stories crop up with such regularity, concerning all sorts of companies not just Apple, that I'm pretty astonished that anyone would post an article like this without doing this very rudimentary bit of maths.

It makes you look really dumb.

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Import duty?

Also, is there import duty on downloaded software? I think there is on software on physical media.

However the HMRC website is such an opaque mess when it comes to things like this that I always end up giving up after about five minutes of fruitless searching.

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Anonymous Coward

Fruitless searching = HMRC win

Didn't you realise that's exactly what you're supposed to do?

One way of stopping people claiming back money, is to make as hard as possible for them to

a) find out about it with 100% clarity

b) actually claim for it.

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WTF?

Who cares?

You can't eat an iTunes app or heat your home with it, which is what concerns many people right now. All iTunes stuff is discretionary spending, which by all accounts is going down the toilet due to inflation, wage freezes and fear. Except $ky Sports of course, which is unaffected by a recession because it seems to be regarded as a utility bill.

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Different regions have different prices

What's the big deal? Do Apple's app store prices change when currencies fluctuate throughout the day? All they do is set a price for a region, with no guarantee that it will match their "master" region, in this case the US. That price will reflect all sorts of different factors and so will lead to the same item costing different amounts in real terms in other regions - it's all about profitability per region and the markups that each region's controlling group within Apple plc they think they can get away with! For example, it is widely thought that the US sells very cheap denim jeans compared to the UK - does the UK arm of Levi ask the US arm to match the UK price? No, as it is a different region and may have differing priorities.

The big problem here is that traditionally people voted with their feet and if they felt they were getting ripped off they would go get their goods from another distributer, which due to Apple's walled garden is impossible, especially when combined with their cartel behaviour in making sure that the Apple app store price is the same everywhere else within a region. It removes the power of the market, i.e. the voice of the consumer. It's kinda the same as when those oil companies got done for artificially inflating the price of oil in secret agreements so there was little fluctuation in price from different outlets.

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You pay and you pay and you pay,...

Shoulda gone with an Android. With Android ya have a mostly open market and as a consequence there is competition which keeps prices honest-ish.

So, pay up iFanPeeps and keep paying up. Cupertino doesn't love you,.... but they do love your $$$.

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I didn't realise

That android had a music store.

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Developers

So does all this extra money feed back to the developers of the programs people are paying more for, or is it all Apple-Tax?

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jai
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developers

70% of the increase will go to the developers.

Apple are still only taking their 30% of the price, whatever the price is.

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Defending price increase

I'm amazed by that some people sayign that a 2-digit perctage price rise is fine and the Apple should be doing that. Gas prices rise and people complain that the engergy companies are just trying to squeese more money out of us, but Apple increase prices by 16% and Apple users just accept that Apple deserve the price rise of there increased cost of ... oh no wait.

Maybe it is early days these comments but defending a large price rise that mainly makes you pay more and impacts you directly seems strange to me.

As @Big Bear says they can raise the price and you have no choice about getting an app from another source.

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Anonymous Coward

Let me finish that for you

"accept that Apple deserve the price rise of there increased cost of" the US dollar compared to 2008 when the previous store prices were set.

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Don't get blinded by the percentages

Forget the percentages, look at the raw figures.

Buying apps is a choice. You can't compare a 10p rise in the price of a budget game with a £100 increase on a winter heating bill. It might feel like a rip-off to some, but nobody ever died because they couldn't afford Angry Birds Seasons.

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iHeaven

Apple fans should just cough up and not complain, after all ever penny spent gets you a step closer to iHeaven.

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Didn't you hear?

Apple need the money. Oh wait...

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Anonymous Coward

Right..

So why did they lower the prices in some countries? Oh wait...

Plus the biggest chunk (70%) of any increase goes to the developers, not Apple.

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