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In general; a $2 cup of coffee in north america costs 2€ in Europe. A $300 Wii U in north america costs 300€ in Europe. The only time currency conversion matter

by Kequc 12y ago

In general; a $2 cup of coffee in north america costs 2€ in Europe. A $300 Wii U in north america costs 300€ in Europe. The only time currency conversion matters is because you are converting between two currencies, when buying a product from another country. GOG.com sells all their games in north american prices because it only has offices in north america. You are buying a product from north america when you buy from them. Dropbox, Steam, Nintendo, Sony all have offices in Europe. So you aren't buying a foreign product and you do not account for a currency conversion as there isn't one. Taxes are an important consideration. For example if you buy a $500 cell phone from north america and have it shipped to Europe. You will pay less for the phone but when it crosses the border you pay considerable taxes such that the "deal" is no longer worth it. If import taxes were applied to physical as well as digital goods, as they probably should be, you would actively want to buy from a European company within Europe. You currently do for most goods, because it actually saves you money. It's the lag on charging tax for imported digital goods. Otherwise you are earning Euros you are spending Euros, there is no currency conversion.

klausa 12y ago
>GOG.com sells all their games in north american prices because it only has offices in north america. They also price their stuff in EUR, have offices in Poland and the company is registered on Cyprus.
nicky0 12y ago
> A $300 Wii U in north america costs 300€ in Europe. I don't get what you are saying. Do you think that the number will always be 300 everywhere. 300 Yen, 300 pounds?
- rakoo 12y ago
  I take it you don't live in Europe. That's actually how it happens: when something costs $300 in the USA, you can bet it will cost 300€ here in Europe.
- mkohlmyr 12y ago
  I understood his point to be rather the opposite, that the real price (if you had an absolute global unit) of the product in one place does not necessarily correlate to other places. The fact that the numbers he used were both 300 is irrelevant. The point he is making is that the cost in Europe is higher for reasons beyond the physical cost of the product.
- simonh 12y ago
  No, he's saying what he's saying. A $1300 Macbook costs £1,000 here in the UK which is roughly 30% more expensive than a direct currency conversion would have you expect. If you take that $1300 Macbook, add 30% and convert that to Euros it just happens to be that it works out at about €1300 which is what they charge in Germany. Someone posted about that here earlier. Most of that 30% is due to VAT at around 20% for much of Europe, plus another 10%. It's that last 10% that's the real price difference of the goods. Personally, I think the main cause of that is the generally higher cost of doing business in Europe (UK included). Everything costs more here. Petrol (Gas) and hence transport, wages, property, corporate tax rates, etc. It's hard, if possible at all, to find anything that's cheaper over here and all of that feeds in to the cost of doing business. The first time I visited the US I was shocked at just how much cheaper _everything_ seemed to be. Frankly, I'm surprised it's only another 10%.
  - speeder 12y ago
    When my sister went to a backpack trip.visiting lots of countries in Europe ( she visited England, Holland, and lots of countries.between.there and Croatia, Hungary, etc...) she was surprised.about how much everything was.cheaper than Brazil, government efficiency is always impressive, the more efficient your government is, the lower the prices compared to other countries,.nevermind.comparing to your own income ( ie: despite Europe having lower prices.than Brazil, salaries, even after all taxes, are much, much higher )
    - icebraining 12y ago
      That sounds off. What kind of prices? Brazil has high import taxes, so stuff like iPhones will be much more expensive, but I frankly don't believe that "everything" is cheaper in the UK or Netherlands. Numbeo corroborates this: http://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=Netherlands&country2=Brazil&city1=Rotterdam&city2=Rio+De+Janeiro http://www.numbeo.com/cost-of-living/compare_cities.jsp?coun...
      - rglullis 12y ago
        It's more complicated than OP says, but not too far off. In big cities like São Paulo or Rio, the prices of services have skyrocketed in the past 5 years or so. The only thing that can be considered cheap in Brazil currently is electricity, and that is only if we compare with Europe. And this is due only to most of Brazil having a tropical climate, which eliminates the need for residential heating. If you go for groceries, and you see that staple food hasn't increased much, but meat/poultry/fish has gone up in prices due to local producers increasing their prices to match the exporters - so now a kilo of decent beef steaks is around R$35 (~US$15,50), when it could be had for R$10 in 2008. Entertainment is expensive: movie tickets for US$15. Paul McCartney played in São Paulo a few years back and the cheapest tickets were going for US$300. Nightclubs all have a cover charge of at least US$30. A bus ride from São Paulo to Rio (which is equivalent to Boston-NYC) costs +/- US$30. Any passable restaurant will cost at least US$35/person. I went to visit my parents last year, we went out for a nice pizza place by the beach - R$75 each pizza. Taking a look at these things, if you are a Brazilian tourist visiting any European/North American city, most of the things you will see are not related to basic cost of living - mostly entertainment and general shopping - and these are indeed cheaper compared to Brazil.
masklinn 12y ago
> A $300 Wii U in north america costs 300€ in Europe. Which is exactly the problem considering the Euro is 30% stronger than the dollar right now. It's also wrong, the $300 Wii U[0] is 275€[1], which is roughly correct ($300 + 20% french VAT is 274€) [0] http://www.amazon.com/Nintendo-Wii-Mario-Luigi-Deluxe-U/dp/B00G0OYHCW/ref=sr_1_1 http://www.amazon.com/Nintendo-Wii-Mario-Luigi-Deluxe-U/dp/B... [1] http://www.amazon.fr/Console-Nintendo-noire-Mario-Kart/dp/B00JXCBOUQ/ref=sr_1_4 http://www.amazon.fr/Console-Nintendo-noire-Mario-Kart/dp/B0... > GOG.com sells all their games in north american prices because it only has offices in north america. You are buying a product from north america in that case. GOG.com sells in local currency. > For example if you buy a $500 cell phone from north america and have it shipped to Europe. You will pay less for the phone but when it crosses the border you pay considerable taxes such that the "deal" is no longer worth it. Mobile phones are duty-free under CCT (the common customs tariff), so you only pay the local VAT which is 15~25%. Given the phone is probably marked up 30~40% compared to the US, the deal is most definitely worth it, even paying the VAT.
Swizec 12y ago
Yes, kind of, but not really. The problem right now is that €1 is worth $1.3. In Europe VAT is included and is about 20% in most countries (it does vary), in US it's not. So, a service that costs €1 in Europe, gets the provider €0.8, or $1.05. Import tax is generally the same as VAT as far as I know. Sales tax in the US is usually around 7% -> to a consumer, a $1 service costs $1.07. This means that if you import a $1 thing from the US to Europe, and don't have to pay shipping, you are saving some 13% of the price as the consumer, and the seller gets 5% less money than the equivalent price in European currency. That is today. The difference varies, I've seen as high as 1.5 dollar per euro. This explains why everyone is suddenly asking me to bring them iPads and Macbooks and whatnots because I'm coming back from the US in a month.
- masklinn 12y ago
  > Import tax is generally the same as VAT as far as I know. There's no import tax on software, on services, on cell phones or on laptops. I could find no such thing on TARIC anyway. It does list consoles with 0% import tax.
  - Swizec 12y ago
    Even better then, you get a full 13% discount for buying in USD when listed prices are same in USD and EUR.
  - claudius 12y ago
    There are no customs, but you still have to pay import tax of the same amount as VAT would have been if you had bought the item locally as a consumer, at least that was the case last time I bought something in the US.
    - masklinn 12y ago
      You have to pay the VAT, which is just that, the VAT. The fundamental problem with locally sourced electronics or "1€ = $1" services is not so much the local VAT as the extra 10-20% on top of the VAT.
gadders 12y ago
And typically $300 converts to £300 which is even worse.
- smnrchrds 12y ago
  Yet it never converts to CAD $300
  - orbitur 12y ago
    The EUR and GBP are worth significantly more than the USD, while the CAD is always less than the USD. Basically, everyone outside the US is screwed in different ways.
petercooper 12y ago
It's the lag on charging tax for imported digital goods. We do in the UK, if you're a VAT-registered business. For example, let's say my business pays $100/month for Web hosting in the US (or even the £40/month I pay to Adobe for Creative Cloud). I then have to "reverse charge" $20 of VAT to my accounts but then also claim back $20 of VAT from the tax authorities.. so it's a net zero result, but we still "paid" it. I don't believe this applies to regular citizens though, but I could be wrong.. if it does, I know no-one who does it.
_delirium 12y ago
There are a handful of things like videogames where that's true as part of the region-based market segmentation, but I haven't found it to be true in general. Cloud services in particular are usually priced so that the dollar and Euro prices are approximate conversions of each other. Look at, say, the $ vs € pricing for Azure, or for OVH.
nraynaud 12y ago
Do not buy GSM stuff blindly in the US, some phones might not be used in some countries. The iPhones have different part numbers and different frequency ranges depending on the country.
- joshvm 12y ago
  Along the same lines, some high power radio devices in the US would be illegal in Europe because they're in the wrong band. XBee radios are happy at 900MHz in the US, however this is GSM band in most of Europe and we use 863MHz for sub GHz radio instead. And almost vice versa, US GSM is 850MHz I believe. It's a real pain for electronics work because you can't buy off the shelf things from the big hobbyist stores.

by Kequc 12y ago

klausa 12y ago

>GOG.com sells all their games in north american prices because it only has offices in north america. They also price their stuff in EUR, have offices in Poland and the company is registered on Cyprus.

nicky0 12y ago

> A $300 Wii U in north america costs 300€ in Europe. I don't get what you are saying. Do you think that the number will always be 300 everywhere. 300 Yen, 300 pounds?

rakoo 12y ago
I take it you don't live in Europe. That's actually how it happens: when something costs $300 in the USA, you can bet it will cost 300€ here in Europe.
mkohlmyr 12y ago
I understood his point to be rather the opposite, that the real price (if you had an absolute global unit) of the product in one place does not necessarily correlate to other places. The fact that the numbers he used were both 300 is irrelevant. The point he is making is that the cost in Europe is higher for reasons beyond the physical cost of the product.
simonh 12y ago
No, he's saying what he's saying. A $1300 Macbook costs £1,000 here in the UK which is roughly 30% more expensive than a direct currency conversion would have you expect. If you take that $1300 Macbook, add 30% and convert that to Euros it just happens to be that it works out at about €1300 which is what they charge in Germany. Someone posted about that here earlier. Most of that 30% is due to VAT at around 20% for much of Europe, plus another 10%. It's that last 10% that's the real price difference of the goods. Personally, I think the main cause of that is the generally higher cost of doing business in Europe (UK included). Everything costs more here. Petrol (Gas) and hence transport, wages, property, corporate tax rates, etc. It's hard, if possible at all, to find anything that's cheaper over here and all of that feeds in to the cost of doing business. The first time I visited the US I was shocked at just how much cheaper _everything_ seemed to be. Frankly, I'm surprised it's only another 10%.
- speeder 12y ago
  When my sister went to a backpack trip.visiting lots of countries in Europe ( she visited England, Holland, and lots of countries.between.there and Croatia, Hungary, etc...) she was surprised.about how much everything was.cheaper than Brazil, government efficiency is always impressive, the more efficient your government is, the lower the prices compared to other countries,.nevermind.comparing to your own income ( ie: despite Europe having lower prices.than Brazil, salaries, even after all taxes, are much, much higher )
  - icebraining 12y ago
    That sounds off. What kind of prices? Brazil has high import taxes, so stuff like iPhones will be much more expensive, but I frankly don't believe that "everything" is cheaper in the UK or Netherlands. Numbeo corroborates this: http://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=Netherlands&country2=Brazil&city1=Rotterdam&city2=Rio+De+Janeiro http://www.numbeo.com/cost-of-living/compare_cities.jsp?coun...
    - rglullis 12y ago
      It's more complicated than OP says, but not too far off. In big cities like São Paulo or Rio, the prices of services have skyrocketed in the past 5 years or so. The only thing that can be considered cheap in Brazil currently is electricity, and that is only if we compare with Europe. And this is due only to most of Brazil having a tropical climate, which eliminates the need for residential heating. If you go for groceries, and you see that staple food hasn't increased much, but meat/poultry/fish has gone up in prices due to local producers increasing their prices to match the exporters - so now a kilo of decent beef steaks is around R$35 (~US$15,50), when it could be had for R$10 in 2008. Entertainment is expensive: movie tickets for US$15. Paul McCartney played in São Paulo a few years back and the cheapest tickets were going for US$300. Nightclubs all have a cover charge of at least US$30. A bus ride from São Paulo to Rio (which is equivalent to Boston-NYC) costs +/- US$30. Any passable restaurant will cost at least US$35/person. I went to visit my parents last year, we went out for a nice pizza place by the beach - R$75 each pizza. Taking a look at these things, if you are a Brazilian tourist visiting any European/North American city, most of the things you will see are not related to basic cost of living - mostly entertainment and general shopping - and these are indeed cheaper compared to Brazil.

masklinn 12y ago

> A $300 Wii U in north america costs 300€ in Europe. Which is exactly the problem considering the Euro is 30% stronger than the dollar right now. It's also wrong, the $300 Wii U[0] is 275€[1], which is roughly correct ($300 + 20% french VAT is 274€) [0] http://www.amazon.com/Nintendo-Wii-Mario-Luigi-Deluxe-U/dp/B00G0OYHCW/ref=sr_1_1 http://www.amazon.com/Nintendo-Wii-Mario-Luigi-Deluxe-U/dp/B... [1] http://www.amazon.fr/Console-Nintendo-noire-Mario-Kart/dp/B00JXCBOUQ/ref=sr_1_4 http://www.amazon.fr/Console-Nintendo-noire-Mario-Kart/dp/B0... > GOG.com sells all their games in north american prices because it only has offices in north america. You are buying a product from north america in that case. GOG.com sells in local currency. > For example if you buy a $500 cell phone from north america and have it shipped to Europe. You will pay less for the phone but when it crosses the border you pay considerable taxes such that the "deal" is no longer worth it. Mobile phones are duty-free under CCT (the common customs tariff), so you only pay the local VAT which is 15~25%. Given the phone is probably marked up 30~40% compared to the US, the deal is most definitely worth it, even paying the VAT.

Swizec 12y ago

Yes, kind of, but not really. The problem right now is that €1 is worth $1.3. In Europe VAT is included and is about 20% in most countries (it does vary), in US it's not. So, a service that costs €1 in Europe, gets the provider €0.8, or $1.05. Import tax is generally the same as VAT as far as I know. Sales tax in the US is usually around 7% -> to a consumer, a $1 service costs $1.07. This means that if you import a $1 thing from the US to Europe, and don't have to pay shipping, you are saving some 13% of the price as the consumer, and the seller gets 5% less money than the equivalent price in European currency. That is today. The difference varies, I've seen as high as 1.5 dollar per euro. This explains why everyone is suddenly asking me to bring them iPads and Macbooks and whatnots because I'm coming back from the US in a month.

masklinn 12y ago
> Import tax is generally the same as VAT as far as I know. There's no import tax on software, on services, on cell phones or on laptops. I could find no such thing on TARIC anyway. It does list consoles with 0% import tax.
- Swizec 12y ago
  Even better then, you get a full 13% discount for buying in USD when listed prices are same in USD and EUR.
- claudius 12y ago
  There are no customs, but you still have to pay import tax of the same amount as VAT would have been if you had bought the item locally as a consumer, at least that was the case last time I bought something in the US.
  - masklinn 12y ago
    You have to pay the VAT, which is just that, the VAT. The fundamental problem with locally sourced electronics or "1€ = $1" services is not so much the local VAT as the extra 10-20% on top of the VAT.

gadders 12y ago

And typically $300 converts to £300 which is even worse.

smnrchrds 12y ago
Yet it never converts to CAD $300
- orbitur 12y ago
  The EUR and GBP are worth significantly more than the USD, while the CAD is always less than the USD. Basically, everyone outside the US is screwed in different ways.

petercooper 12y ago

It's the lag on charging tax for imported digital goods. We do in the UK, if you're a VAT-registered business. For example, let's say my business pays $100/month for Web hosting in the US (or even the £40/month I pay to Adobe for Creative Cloud). I then have to "reverse charge" $20 of VAT to my accounts but then also claim back $20 of VAT from the tax authorities.. so it's a net zero result, but we still "paid" it. I don't believe this applies to regular citizens though, but I could be wrong.. if it does, I know no-one who does it.

_delirium 12y ago

There are a handful of things like videogames where that's true as part of the region-based market segmentation, but I haven't found it to be true in general. Cloud services in particular are usually priced so that the dollar and Euro prices are approximate conversions of each other. Look at, say, the $ vs € pricing for Azure, or for OVH.

nraynaud 12y ago

Do not buy GSM stuff blindly in the US, some phones might not be used in some countries. The iPhones have different part numbers and different frequency ranges depending on the country.

joshvm 12y ago
Along the same lines, some high power radio devices in the US would be illegal in Europe because they're in the wrong band. XBee radios are happy at 900MHz in the US, however this is GSM band in most of Europe and we use 863MHz for sub GHz radio instead. And almost vice versa, US GSM is 850MHz I believe. It's a real pain for electronics work because you can't buy off the shelf things from the big hobbyist stores.