Software price discrepancies – justified or not?
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It is no surprise that Australians pay more than their overseas counterparts for everything from clothes, computers, and electronics to software but is this higher price justified? According to Choice magazine, Australians pay an average price difference of 50% for computers, software, gaming and music products. In some cases, Australians pay over 80% more. For example, a popular anti-virus software program is sold for download in Australia for AUD $89.99 but only AUD $48.22 in the United States.
A parliamentary inquiry into these alleged price discrepancies of hardware and software sold in Australia was launched by the Federal Government in May of this year. The inquiry will investigate whether Australians pay more for hardware and software compared to those sold in the US, UK and Asia Pacific. So far the inquiry has received close to a hundred submissions from customers, partners and vendors.
Is there any justification for higher priced software in Australia?
According to Brett Raven, Principal Business Solutions Consultant at Solentive, there can only be justification for charging higher priced software in Australia if any of the following expenses are also more costly in Australia:
“There is no irrefutable argument for charging more in Australia for software products that are distributed globally through electronic means,” commented Brett.
“In the case of tangible products, supply chain costs and local outlays for marketing and support can funnel down to the consumer. However, the price differential between Australia and the United States for example, should only be by a few per cent,” concluded Brett.
A parliamentary inquiry into these alleged price discrepancies of hardware and software sold in Australia was launched by the Federal Government in May of this year. The inquiry will investigate whether Australians pay more for hardware and software compared to those sold in the US, UK and Asia Pacific. So far the inquiry has received close to a hundred submissions from customers, partners and vendors.
Is there any justification for higher priced software in Australia?
According to Brett Raven, Principal Business Solutions Consultant at Solentive, there can only be justification for charging higher priced software in Australia if any of the following expenses are also more costly in Australia:
- - Distribution or transportation – unlikely for downloadable software products
- - Licensing
- - Support – Australia is a smaller market and therefore may lose economies of scale. This is not applicable when offshoring to countries that can provide support services for less – which is a common practice nowadays.
- - Taxes/tariffs - varies on a case-by-case basis
“There is no irrefutable argument for charging more in Australia for software products that are distributed globally through electronic means,” commented Brett.
“In the case of tangible products, supply chain costs and local outlays for marketing and support can funnel down to the consumer. However, the price differential between Australia and the United States for example, should only be by a few per cent,” concluded Brett.
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