Hacker News Reader

Hacker News

Comment by mattvot | Hacker News Reader

Full thread

mattvot

Can someone explain why tech stuff in general is quite a bit more expensive in Australia comparatively?

View on HN

Two main reasons.

1. Australia is a small market, so for a lot of things there are poor economies of scale and/or cozy oligopolies.

2. Exchange rates.

Then along came:

3. Artificial market segmentation.

Region encoding, per-country versions and so on. There's no technical reason for this, it's done simply because (thanks AUSFTA) it can be done.

The artificial segmentation didn't used to be a big problem until the AUD shot up against the USD. Now that our dollar is at approximate parity with the American, it's very easy to compare prices.

Mix in the fact that retail prices have remain steadfastly fixed in place in spite of the change in exchange rate, and consumers have correctly deduced that retailers and distributors are simply taking a windfall and running with it. That nobody is aggressively undercutting goes back to 1.

Your last point is the most salient. Until downloadable software became all the rage in recent years, there was effectively nowhere else to buy from.

I once bought a new Thinkpad on ebay from a guy in New York who ordered them in sight:unseen to resell to Aussies. He had no idea why they were so expensive here, he just saw he could make a bob or two reselling the retail US models for 2/3rds the Aus price.

You've got to wonder why they haven't tried artificial market segmentation between US States yet.

Could there be something in the constitution to prevent it? The Australian constitution is derived from UK and US, and section 92 mandates free trade between states.

Update: it seems there is. http://in.answers.yahoo.com/question/index?qid=2010032513551...

This isn't relevant; it only governs the actions of the US Congress. Australia has similar language to prevent the Commonwealth Parliament from discriminating between the states.

Too noticeable, the publicity would be terrible. And too easily subverted by people importing across state lines.

Anybody who lives near a state border will know which side of the border has cheaper taxes and will go there to buy things like cars and booze.

Maybe be taxes. I assume Adobe is pumping Australian revenue to its Ireland unit while the US revenue goes through the main company. Maximize revenue overseas since the profit is taxed at a lower rate effective rate. Just a guess.

"The revenues generated by Adobe’s Irish unit represent 55 per cent of Adobe’s worldwide revenues of $4.2 billion in the year to the end of December 2nd 2011"

http://www.irishtimes.com/newspaper/finance/2012/1012/122432...

Yeah i'm in Australia and subscribe to adobe creative cloud. My credit card is being charged by Ireland adobe.

This is probably not something you'll hear the companies say themselves, but frequently the exchange rate between the US and other countries is set on a yearly or even long-term historical basis and not modified.

With the long term historical average of AUD-USD at around 65 cents, this can make software look outrageously overpriced. Given the relative size of the Australian market (2-4% sometimes) there is little incentive to change this methodology.

A lot of tech stuff is pretty cheap. Hardware which is sourced from Taiwan and other nearby tech supply countries are reasonably priced when landed by the smaller, sometimes Asian run firms.

The big retailers have a cartel like influence you could argue. Just about everything not made of pulverised rock or grown in pulverised rock is imported from somewhere. This allows what should be tech commodity businesses to charge what the market will bear, rather than competitive prices. A bit like mobile carriers in the states really.

Australia has a high tech take up, but its a very small market with a high dollar, so it's easy to get your dollars without worrying about volume.

People are willing to pay more, so companies charge more.

There is also higher cost of operating, higher wages etc. But I think all that is besides the point, companies want to maximize profits and if they can charge a higher price and still get a similar amount of sales to a lower price (as in Australia) they will charge high.

Exactly, and if they can't they will lower the price. This is all a beat up really.

I've heard that setting up shop is quite expensive in Australia due to a number of factors, and that the online prices is matched up to the retail price to avoid hurting profits.

Starting a business in Australia is ridiculously expensive. In the UK it's £20 ( last time I looked ). In Australia it was $900 or so when I looked. Lots of regulations on this and that. My pet theory is that it started out militaristically and has stayed that way ever since.

I think this is wrong. Australia ranks as the 2nd easiest country to start business, according to this site: http://www.doingbusiness.org/rankings

It is $900 or more to incorporate a company. Starting a business can be much less, and can be done in a day.

In any case, this does not explain Adobe charging Australians $1000+ more on every sale of a certain package.

I was answering the first part of the grandparent. It's easy to start a self employed business, but I'm referring to limited liability companies in the UK and incorporated companies in Australia. Pretty obvious really, that's why the UK is a nation of small shopkeepers. It's simple to do.

Has nothing to do with the cost of software, except in respect of margins, which I and others have mentioned are kept at near parity in the large retail sector, a sector with somewhat unstressed economies of scale.

Incorporating a company is relatively cheap ($450AUD) and the last time I did it, it was done <10 minutes. All you need to do is scan and email through some identification, nominate the directors, and set the allocation of shares. Most online "company incorporation" providers send you all the material to conduct your first meeting of directors and the Corporations Act provides a standardized set of "replaceable" rules that you can use as is, or modify to form your company's constitution.

You can then register with the ATO (<10 minutes) and you're all done: ACN and TFN.

Summary: In Australia <$500 and <20minutes gets you a Pty. Ltd. from your couch at home.

Thanks for that. I only had a cursory look at starting a company with an ABN when in Australia. It was a few years ago, but I was initially shocked at the difference. In the UK it's £20 to register a private limited company, £15 for the annual return, and that's it for companies house. Inland revenue and employment is extra, but it's cheap to set up trading companies in the UK. And the more of those you have the more likely you are to have competitive pressures in retail.

I'm no expert on Australia's seemingly top heavy retail structure. Maybe it's just an incorrect impression I have that the top end of town gets accommodated, but that the rest have lots of hoops to jump through.

You can get an ABN[1] and set up as a sole trader/partnership online completely free if you're an Australian citizen (I'm not sure whether you can if you're foreign).

I paid about $560 to set up my company (a company has an ACN[2] from the ASIC[3] and an ABN and TFN[4] from the ATO[5]) but if you do the paperwork yourself it's cheaper.

1. Australian Business Number 2. Australian Company Number 3. Australian Securities and Investment Commission 4. Tax File Number 5. Australian Tax Office

Yes, setting up as a sole trade is completely free, just need to fill in some paperwork. Setting up a Pty Ltd is a $399AU ASIC fee last I checked, and filling in some more paperwork.

I used a service for this, which produced all of the necessary documentation for me, which cost only $200 extra.

It then costs about $200-$300 a year to maintain through the annual ASIC renewal fee.

Reply on news.ycombinator.com