On straight current exchange rates, £23 is equal to $36 and Aus$42. So why isn't that what they cost respectively? With Australia, the argument is that the cost of getting the product to the consumer is high due to distance, and so that has to be added on to the cost of the product. Similarly, there is a cost (although lower) of distributing a US brand in Europe. As well as the shipping costs, there are nearly always going to be import taxes on luxury goods, and purchase taxes vary by country (and in the US, by state.)
I accept all that to a certain extent, but in the case above, Australian consumers are still getting kicked.
The simple fact is, brands charge what the market will accept. Generally, most cosmetics are transfer priced at £1 to $1.50ish, and stayed at this level even when the pound was nearly at $2. That makes sense - why would Laura Mercier or Bobbi Brown drop prices for us when they could just make extra profit? On the flipside, it was difficult for established brands to start charging more in the US, which is why you had the anomaly of UK brands like Jo Malone (arguable to still call it a UK brand now that it's a Lauder, but still,) costing more in the UK than they did in the US.
The store in the UK that takes the biggest liberty with transfer pricing is SpaceNK. Quite often, $1 will nearly equal £1 in the SpaceNK pricing policy, and that's pretty cheeky. Examples include:
Oribe conditioner for brilliance and shine is $47 in the US and £43 in the UK.
Kate Somerville antioxidant serum is $65 in the US and £59 in the UK.
Lipstick Queen Medieval is $20 in the US and £19 in the UK.I could go on, but I'd probably bore you to tears. SpaceNK can do this because they bring over exclusive brands you can't find anywhere else. I'm really pleased to see that their position as the place to buy beauty exclusives is being challenged by online beauty retailers like Zuneta, Content and Puresha, who generally charge fairer prices for non-UK brands - an Hourglass lipstick costs £18 at Zuneta, and $24 at Sephora in the US, and an RMS Lip2Cheek costs £28 at Content, and $36 from RMS in the US.
My personal, all-time, I will never order from that brand again because of their dodgy pricing policy, goes to Bionova. This is a US line that has a UK website. The prices are about £1 to $1, but I accepted that, grudgingly. What really made me cross was that what the website doesn't tell you is that your UK price will then be converted into dollars on your credit card, at the credit card exchange rate, and you will end up paying even more than the published price plus whatever your credit card charges you as a foreign currency fee. Shame, as the products themselves were pretty good, if strange-smelling.
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You don't want to know what products cost in Paris. Way too much. I went there thinking I could grab a bargain. Turns out Mac and Bobbi Brown cost £20% more. It's silly.
ReplyDeletegrrrrrrrrrrrrrrrrrrrrr it annoys me no end that things cost buckets of cash here when they really shouldn't. It is especially irritating when the quality does not match the price when put alongside similar costing items.
ReplyDeleteAgree with Eva about Paris - I thought the UK have it bad but I went to Paris this year and was surprised to see that many high-end French brands cost more in France then in the UK. Apart from MUFE, I generally skipped department store buys over there.
ReplyDeleteHi Eva and Anonymous - I wonder if the current strength of the Euro has something to do with that - it's nearly €1 for £1, rather than €1.5. I have read that a lot of Republic of Ireland shoppers have been travelling to the North to take advantage of the current exchange rate. It is mad when a French brand costs more in France.
ReplyDeleteHi Old Cow - I'm of exactly the same opinion. x
Thank you all for your comments.
Answer: simply because some companies are being too greedy.
ReplyDeleteI used to complain a lot about this when I lived in Australia. I love some of Mario Badescu products & the only place I could buy them from was KIT (perhaps equivalent of SpaceNK here?) - it costed me triple of US price for half-size product if I remember correctly. Shudders. Things like Nude, This Works, etc. cost a bomb at Mecca. I don't do online shopping, so at that time I was forced to pay the exorbitant price. Having said that, both KIT and Mecca gave SUPERB customer service and gave generous samples when asked, so in a way it wasn't that bad.
Elemis was way overpriced in OZ, too. And don't get me started on perfumes price, the most expensive place to buy perfumes is Australia. It's a total rip-off, I refused to buy full-priced perfume there, only bought them during sales period. I stocked up on perfumes whenever I'm on holiday in Singapore as they're much cheaper. And no, I don't buy immitation perfumes, I bought originals at Singapore's big department stores!
Sometimes I envy my US friends as they seem to get everything cheaper there...
I think that's my rant of the day. Your fault, I wasn't intending to rant. LOL.
I wonder if it has anything to do with population density. More people = more potential sales?
ReplyDeleteAli
Hi Music - whenever I feel grumpy about the price of stuff here, I do always remind myself I'm lucky I'm not buying cosmetics in Australia. The prices are just insane. Think of it as a vent, rather than a rant ;) Thank you for visiting. x
ReplyDeleteHi Ali - I think that the increased competition in the US market pushes prices down too - more brands available generally. I'm sure the bigger market helps too. Thanks for your comment. x
Interesting post. I have often wondered this myself especially when I'm shopping for higher end products. I think the higher costs prevent me from really invistigating a brand in some cases.
ReplyDeleteIt bothers me to no end as well, especially as such free-flowing information nowadays makes such pricing policies available to anyone who does even a tiny bit of research.
ReplyDeleteCompanies will charge what the market can bear, unfortunately. Also, international duty (not a problem for EU countries trading in the EU or North American countries trading in the NAFTA area) can be huge, depending on which country we're talking about, and that can be prohibitive. That, for example, is why India, for all the potential it's still (decades later) said to possess, it's virtually an un-tapped market with a nearly 20% import duty (not to mention 'baksheesh' culture).
Back to the point: brands should simply be more transparent with their pricing, especially if they're dealing across countries that speak the same language and whose populations have very easy access to information across borders.
Apple had to lower the prices of their downloads on iTunes in the UK after their transfer pricing policies caused outrage when they tried to do a quid a download (it was a $1 a download in the US). The market couldn't bear that pricing... if we're the same way with beauty products, the same should, in theory, happen.
Hi Naomi - unfortunately curiosity often gets the better of me :) I know exactly what you mean though - if I feel a brand is unfairly priced I'm much less likely to be tempted by it. For example, I love Lipstick Queen, but I'll rarely buy it over here; I most often get a friend from the US to buy it for me. x
ReplyDeleteHello Jessica. I hope that the e-tailers challenging SpaceNK for market share may force it to rethink its pricing policies, but SpaceNK has been getting away with it for a long time now.
ReplyDeleteIt'll be interesting to see if the effect that the internet has had on house prices and insurance policies (it's much easier for a layperson to research a "fair" price now) will also happen increasingly with consumer goods. As you wrote, it's already happened with iTunes.
Thank you for your comment.
...which explains why when I was in Australia I lived in Australis products. Prices for anything imported were horrendous. I used to have to save up all month to buy Uncut magazine. Thanks for the post, I'm currently trying not to be tempted to buy any Kashuk brushes in SpaceNK knowing how much I'm gonna get ripped off doing so.
ReplyDeleteHi Lipglossiping - I struggle with the same thing with SpaceNK - I really want the product, but I know I'm being overcharged! Thanks for visiting.x
ReplyDeleteAnother unhappy australian! I knew we were being overcharged but not to that extent!!!!
ReplyDeleteI know that shipping/postage costs are taken into account but surely these company's/department stores would order and ship in bulk therefore offsetting the price.
doesnt stop me from purchasing however! I just try and wait for a duty free environment to do so.
yup, you should see prices in Ireland - it's incredibly common for fashion and beauty to be almost 50% more expensive than Sterling, which could have been fair three years ago but not now. Even taking into account our higher VAT rate, distribution and apparently more expensive operating costs, someone is making a huge wodge of cash and it's not the consumer. So a lot of people do pop north and buy, can't blame them, your cash goes a lot further.
ReplyDeleteHi Emily - I do feel for Australian consumers. Thanks for your comment. x
ReplyDeleteHi Kirstie - I think once brands set a price they don't ever move it downwards with currency trends. I can see why consumers would hop the border. Thanks for visiting my blog.