James O'Neill's Blog

December 8, 2006

Overpriced and over here #2

Filed under: Uncategorized — jamesone111 @ 7:56 pm

Or what happens when you throw stones in a glass house.

My post on over priced and over here attracted the following comment from Russ Pitcher.  

The same price disparity appears to exist with Windows Vista.  For Vista Ultimate the US RRP seems to be $399, Amazon.co.uk are advertising it at £369.99 which equates to $727!  Almost twice the price!
Given this state of affairs, is it OK to buy a copy in the US and get my sister-in-law, who lives in Atlanta, to ship it over to me? (Hopefully the shipping won’t cost $328 ;])  Is this within the license terms and will I still have access to UK regional settings?

Rather than allow it to go forward as a comment I thought it deserved its own post. This is David Weeks‘ area, but since he wasn’t around I ended up speaking two of his colleagues to get the story. The is longer and more complicated than I’d imagined, but here’s the gist.

There are two dead simple ways of getting a UK price. (a) Divide the US price by the exchange rate (roughly 2) (b) Cross out the $ sign and put in a £.
We don’t do either.  

We don’t use a free floating exchange rate internally, and while the pound is going up this increases the difference between UK and US prices. There are further complications such as UK prices quoted with Tax and US prices without and issues of European law which stops us charging more in (say) France and Germany, than in Britain and Ireland even though we have to translate the product for those markets.

Last, is question of margins. Although we can’t enforce a retail price (that’s been illegal for years) we do make suggestions to retailers as to what the price should be (the price we sell it plus the typical industry margin) but we don’t publish that information. After my conversation with the folks upstairs I’m quite happy not to know.  Suffice to say that Amazon set their own pricing and that reflects both what we charge them for the US and UK packages and their own margins – which I’d guess are higher here (and that is a guess) The price difference is all down to us, or all down them. And until the product has been on the shelves for a bit I’d take those prices with a pinch of salt.*

Now Grey Imports. Microsoft UK hate Grey Imports because that’s a UK sale going to the US; so don’t expect anyone here to be supportive. Microsoft Redmond don’t really mind, seeing a sale is sale, and the net contribution to our bottom line is very similar in both cases. You’ll have to pay VAT @ 17.5% on the import plus shipping and handling, but there’s still a saving to be had. Throughout the betas and now with RTM I have been running US vista with UK regional settings, so a Grey Import will work just fine.

* Update. Russ’s price for from Amazon UK is for the non-upgrade version. Anyone with an existing PC should be buying the upgrade which Amazon list but without a price. You also pay less for Windows when it is pre-installed on a PC than if you buy the full retail product. Interestingly since he did his research prices have gone from all the Vista products on Amazon US. As I said, until the product has been out for a little while don’t take prices as Gospel.

This post originally appeared on my technet blog.


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