Ask LH: Why Are Australians Being Ripped Off For Next-Gen Consoles?

Dear Lifehacker, I was so excited about the announcement of the new Xbox One and PS4 at E3 on Tuesday and even happier when they mentioned the price. This excitement soon died when I released EB Games had priced the Xbox One for $100 more and the PS4 for $150 more than the announced price at E3. Why do us poor Australians pay such a large markup ? Are they overcharging? Thanks, Console Me

Dear Console Me,

The so-called ‘Australia tax’ — Australians paying more for equivalent goods than overseas — is always an emotive topic, and in consequence people don’t always think about it sensibly. Let’s look at the specifics in this instance.

The prices EB Games is quoting are the recommended retail price set by the manufacturer for Australia, which is distinct from the US dollar pricing quoted at E3. There are two factors which you have to allow for when comparing the price. The first is the exchange rate between the Australian dollar and the US dollar. The second is that Australian pricing quoted to consumers always has to include the GST, while US pricing never includes state-based sales tax.

Grabbing suggested exchange rates from Google for today (which won’t necessarily be the exchange rates at launch but will serve well enough for discussion), the $US399 price for the PS4 becomes $422, while the $US499 price for the Xbox One becomes $528. Add the 10 per cent GST to each price and the PS4 becomes $$464, while the Xbox One becomes $580.

In other words, you’re paying an actual premium of about $20 for the Xbox One in Australia, and about $85 for the PS4. A $20 price gap doesn’t seem entirely unreasonable, given the different costs of shipping to a smaller market, the need for a different power adaptor and the requirement for a separate safety certification. $85 is definitely stretching the point.

Ultimately, consoles aren’t essential items; if you don’t like the price being charged, your life will continue regardless. Don’t accept that premium? Don’t buy the product. In this case, Sony is clearly exploiting the Australian market more — but I suspect the generally more favourable reception for its launch means a lot of buyers won’t care. Finally, remember this: the one thing you can be certain of is that both consoles will be cheaper in 18 months’ time. Patience can be a virtue.


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