Ask LH: Why Does The Nexus 7 Tablet Cost So Much More In Australia?

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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Comments

    Am I right to remember that the Nexus is built in the US? Rather than Asia.

      IIRC Nexus 7 is manufactured by Asus, meaning probably a factory in Taiwan.

        You might be thinking of the Nexus Q

        I thought so, and after doing a quick search, it is the Nexus Q that is made in the US. Thanks

      Nexus Q is built in America the Nexus 7 is built by ASUS

    Not sure if its true but a mate of mine told me that you can't use AusPost to ship stuff with batteries in them now. If true this means you can't even get a mate in the US to get you one and then post it (normal post) to you. I'll pick one up when I'm on hols I think.

      Like a of of thing, "you can't, but..."

      Recently had a bunch of Ni-Mh batteries shipped to my Aos Post PO box, no problems. If it explicitly states batteries on the package, or is opened bu Aus Post for some reason, then you might get pinged, otherwise...

        I think the issue is with Li ion batteries. And I think the restriction is only on air mail, things with Li ion batteries are ok for surface mail

          The Australia Post website details why Li Ion batteries are disallowed from air-freight (http://auspost.com.au/personal/dangerous-goods-personal.html).

          The main points in the "customer guidelines for sending lithium batteries" PDF: "Changes have recently been made to the International Civil Aviation Organisation (ICAO) Technical Instructions for the Transport of Dangerous Goods by Air resulting in the classification of all lithium batteries as dangerous goods. Consequently, lithium batteries may not be carried in the mail by air ...such items will be carried in the mail by road transport only within Australia via Australia Post’s parcels service."

          Also - "You must place a Road Transport Onlysticker on the front of your package next tothe delivery address. Stickers are available from counter staff. If there are no stickers available you must write the words Road Transport Only(preferably in red) clearly on your package. "

    If you go through the cart purchase it comes up with shipping
    "Shipping (Two Day Shipping):
    A$19.99"

    Also you need to take into account $249AU is a lot cheaper relative to $199US when compared to the relative wages. Minimum wage in the US is substantially less than in Australia, meaning it effectively costs less "time" to afford it in Australia than in the US.

      Agree. It costs more because Australians are willing to pay more.
      It would be a silly company that let consumers keep their money.

      You're spot on ! Think the price as % of average income, and you'll find that it is cheaper here in AU.

    I don't think the charger issue comes into it. We use the same style power plug and voltage as China!

      Kind of. The Chinese plug doesn't have to have insulation round the base of the live and neutral pins. The Chinese version doesn't conform to Australian standards.

      I'd be happy to buy it chargerless as I have plenty of USB chargers already.

    I generally agree that the "Aussie Tax" on this product isn't as bad as it could be...

    I won't be buying one though, as I already have a decent tablet.

    It is a decent price if you don't compare it to other regions - still I don't think I'll get one. I have my Galaxy S3 which is close enough to 5 inches. 7 inches isn't a big enough difference to make me want it. A 10 incher for a similar price would have me doing the early adopter thing. I mainly use the my tablet for Draw Something and web browsing - so I prefer bigger screen real estate.

    The market sets the price - that's capitalism at work. Google crunched the supply and demand numbers and figured the optimum price point was $249 in Australia. We're already used to paying more for everything ! I don't like it either but that's the way it is...

      Agreed. Capitalism at work. My associates can get container from Asia to Australia for $2. This is what Kogan does to get the prices he has and make money. The chargers issues is also negligible. These items are so cheap volume has no effect on the price. Adam is right. An extra $10-15 per device can add up to a lot of money.

    The argument about adding GST is not valid in this case as it is being shipped by Google Asia and does not actually include GST. Also, shipping cost is added on top of the price of the device itself. The only part of the article that could attribute any sort of price variance would be the Australian power plug, which definitely isn't worth another $50.

      You do pay gst even though its shipped from asia. Dont know why though.

    With 0% tax and $20 shipping to Aus, who cares. Just order it from the US.

    It's like anything that comes into Australia. You get a middle man full of greed placing Hugh mark ups. As a nation we are lame ducks to get ripped off. You wonder why we shop online. These greedy swines are destroying the retail sector in Australia. With our dollar equal to the U.S. dollar one has got to wonder why should we pay high prices for technology .

    What middle man? this is ordered and shipped through Google Play. I have been waiting for months for this release because I only want to spend $250.00 on a branded reasonable tablet and then to have Google try and rip us off!! well it looks like ZoHo mail is going to get another user and Duckduckgo will get a little more traffic.

    Just for comparison in terms of price in line with what the article explains:
    8g version will cost around $230USD shipped and with CA state taxes included. A medium sized USPS box costs another $50 to ship to Australia.
    Compared to $269 shipped if getting it direct from Google

    Whats the best way to get it direct from Google USA?

    Transport for a containerload of tablets would be almost irellevent.
    As for the Australian power adaptor. A quick look on Ebay can show you how "little" these cost.

    If you want one, just wait. Boycott them until the price drops. They wont keep gouging if the sales dont come ( but like the cinema prices I expect australian consumers are too stupid ).

    Its not as bad as ride on mowers though, They cost DOUBLE.

    I am in total agreeance with Hary, Boycott until price drops. International companies are screwing aussies because they think we can subsidise their US customers by paying our hard earned money.

    This conversation is all premised on an Australian price of $249.

    Problem is, it costs $314 to $319 in Australia. It's a great tablet, and I have bought one for my wife, but what a rip off!

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