Dear Lifehacker, Why is the entry-level Nexus 7 tablet from Google priced at $US199 in North America but costs $249 for Australian customers? That doesn’t make sense when the tablets are manufactured in Asia. What gives? Thanks, Nexus Vexes
Picture by Matthew Sumner/Getty Images
Dear NV,
The pricing for the Nexus 7 does seem at first glance like an example of the much-discussed ‘Australia tax’: people being charged more for technology goods in Australia even though there seems no logical explanation for the difference. That’s become a big enough problem for a government inquiry to be launched. In truth, however, the Nexus 7 isn’t an especially extreme example.
As you mention, the US price for the Nexus 7 8GB model is $US199, while in Australia we’re paying $249. For the 16GB model, the prices are $US249 and $299. We’re at near-parity with the US dollar right now (and have been ahead for much of this year), so an extra $50 does seem rather extreme. (We don’t know delivery charges in either location yet, so I’m leaving them out of the comparison for now.)
The first point (mentioned frequently in comments yesterday) is that while the Australian price includes GST, the US price does not include sales tax. Sales tax in the US is a state-by-state affair; in Delaware, you pay nothing, but in many states you’ll pay 10 per cent or more. Once you factor that in, the difference still exists, but it’s less extreme.
The shipping issue is more complex than your question suggests. Yes, Australia is closer to most of Asia than the US, but the sheer volume of goods being sent to the US can mean that the actual cost of shipping between countries isn’t purely a function of distance. You can see the same principle at work with airfares; it can be cheaper to fly to Europe than some parts of Asia because there isn’t a volume of traffic to drive fares down. Add in the multiplier efficiencies of sending multiple containers (more tablets will sell in the US because of the larger population) and the difference becomes more explicable.
Producing an Australian power charger (a relatively low-volume item as we’re one of a handful of countries that use that plug configuration) could also marginally increase the manufacturing cost, as could getting relevant approvals for a device using Wi-Fi. I’m not saying that it’s not annoying for there to be a gap, but it isn’t anywhere near as OTT as with software delivered digitally, where there are no shipping issues to consider but prices are often more than twice as much.
What can you do about this? You could ask a friend or family member to order a Nexus 7 for you in the US. However, you’ll then end up paying two lots of shipping, and you’ll have a device with a US power cord. I wouldn’t personally go to all that effort, and I doubt you’d save very much. Knowing the way Android tablet prices fall rapidly, if you wait six months you’ll be paying a lot less anyway. If you want to be in the early adopter crowd, there’s always price to pay. As a consumer, you’re not obliged to buy anything: if you think it’s too expensive, just save your dollars for another day.
Cheers
Lifehacker
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