Apple’s Margins Make Justifying The Australia Tax Even More Difficult

Apple’s Margins Make Justifying The Australia Tax Even More Difficult

The government inquiry into the price of tech products in Australia began public hearings today in Sydney. One argument we’re bound to hear from vendors trying to justify the ‘Australia tax‘ is that local taxes and expenses force higher prices to be charged here than elsewhere. Those arguments seem hard to swallow in an industry where Apple can make a 50 per cent margin on every phone it sells.

As Luke over at Gizmodo notes, if reports from Electronista that Apple makes a margin of up to 58 per cent on iPhones and 32 per cent on iPads are correct, then it is coining in at least $172 in profit for each iPad sold, and $463 on every iPhone. That doesn’t sound like an unprofitable business model. Apple hasn’t made a public submission to the inquiry, arguing that its pricing strategies need to remain confidential for commercial reasons, but has provided a closed-door briefing.

To be clear: I don’t think Apple itself is particularly guilty of charging the ‘Australia tax’ any more, although it has been in the past. Its app prices are now close to equivalent, as is the most recent incarnation of the iPad.

The two areas where it does charge higher-than-US prices are on music and media downloads, and on server hardware. The former is not entirely under Apple’s control (music rights remain regionally assigned by large companies). The latter is more pronounced, but there are plenty of keenly-priced non-Apple choices in that area. The bigger point is that there’s still plenty of profit in some technology areas, so Australian consumers shouldn’t pay an artificial penalty for digital goods just because of where we live.

[Electronista via Gizmodo]


  • I think as long as Apple are ripping off consumers equally, no matter where in the world they are, then that’s fair and a natural part of this beautiful thing we call Capitalism. It would be unfair if they make a big profit margin per unit in the USA and a smaller one in AU because we insist on higher standards (i.e. ACCC regulations). I’m still not convinced we’re being any more ripped off than the rest of the world.

      • I don’t understand your link. what is this steam?
        no i kid. Look there are plenty of websites where you can download the CD key from a US or UK site and upload it to steam or origin at a fraction of the price. Greenmangaming and CJS Keys come to mind. I got BF3 from CJS keys for 32 odd dollars more than 6 months ago

        There are EASY work arounds. Just look for a website with a good rating on a forum such as whirlpool (don’t trust their own “reviews”) that uses paypal for protection. australia tax be gone (for gaming at least)

      • There are a number of games on that page that I have bought through Steam at the same or lower than the listed international price. If you think the Australian price for a game is too high you can give yourself an ulcer raging against the machine or you can just wait for the next time it goes on sale. It will be just as good and it may even have more patches or content.

        iTunes is a bigger problem though I do wonder if the countries that have lower base prices for music on iTunes have less access to discount iTunes cards in their retailers. It seems like there is hardly a week in Australia when you can’t get 33% of iTunes credit somewhere.

        • That’s hardly the point I was making – that’s just an easily visible example of price-gouging on digital goods, a problem that’s extremely wide-spread. And it was primarily in response to Tony, who doesn’t believe it exists.

  • You have to remember that Apple’s motivation is not just to make a profit on every device sold. Their targets would partly be about making a return on investment. They are making an investment in Australia (stores, advertising, etc) and want to make as much of a ROI as they would in another country. I don’t agree with a lot of their pricing, but one thing Apple does that many other companies won’t is provide warranty service on grey imported goods. A silver lining to the “Apple Tax” which isn’t there for other manufacturers.

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