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Comment by forrestthewoods | Hacker News Reader

Price discrimination is a hell of a thing.

The majority of revenue comes from rich regions such as USA and Western Europe. Many regions, such as Russia and Eastern Europe, will buy software but only at a significantly reduced price. Look at average income by country and it makes total sense.

If you sell your game for $50 in the US and $5 in Russia then everyone will just change their region to Russia and buy your game for $5. Or Russian keys will be resold to Americans for $10.

You could sell your game for $50 in Russia but then no one would buy it so it's a waste of time. You could also sell your game for $5 in the US but then you won't make your dev costs back.

Yup.

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And then there's the good old 'Australia Tax', where Australians pay considerably more for software because 'fuck you'. No localisation work done at all. In the old days of bricks and mortar, you could almost believe the excuse that price was nearly double because of shipping costs. But in the modern era of pushing bits?

Only last year it was cheaper to fly to the US buy a full featured copy of photoshop fly back than to buy it in Australia (including digitally distributed versions).

There are still increased costs of doing business. A risk-averse seller will want to vet the local consumer laws to ensure they're not in violation of privacy laws, refund entitlements, quality guarantees, etc etc.

If you're doing those things at arms length, it's really difficult to keep those costs down. Your only option is basically an internationally known Tier 1 law firm. They are _not cheap_. Not only will they bill you plenty per hour, they will take a heck of a lot of time making absolutely certain before they provide an opinion as they don't want to expose themselves to liability.

Whether or not it justifies every price hike out there is in the wind. There are still non-trivial costs associated with doing business in another market even in the digital age, though.

Source: have done digital business in many, many countries from Australia as a base. Have had legal docs localised into AU, US and UK law. Paid staggering amounts of money to lawyers for same.

You have a good point, but Australia still has peculiarly high software prices when compared to other developed countries that are foreign to the software source.

The Steam "Australian" store sells to us in US Dollars. They don't do anything to ensure compliance with Australian law. It's a pure money grab

Australia has extensive VAT taxes, tariffs on top of that, and byzantine regulations that dissuade foreign firms from entering the market (they apply to digital products too). When firms finally do they have to pass the legal costs and taxes on to the customer. Consumers in the rest of the world aren't going to pay for that difference. The real player saying 'fuck you' here is the Australian government.

GST does not apply to products sold overseas and shipped to Australians for any product under $1000. For products supplied digitally, as far as I know there is no GST on any digital products, no matter what the value.

By 'extensive VAT taxes', do you mean "VAT half that of the UK"? As for tariffs, why is it that some games on steam are the same price as elsewhere and others, usually AAA games, are price-gouging?

In any case, there are zero tariffs on digital goods between the US (where most games are made) and Australia, due to the free trade agreement. [1]

So, you have an environment where there is less tax on the goods than in the UK, yet the prices are higher. The answer is not "government has its finger in the pie". In fact, the GST at 10% isn't that far off sales tax across the US, which is generally 7-9%, so seriously, the answer really, really isn't "taxes".

[1]http://en.wikipedia.org/wiki/Australia%E2%80%93United_States...

I'm Australian but I don't see what's wrong with an Australia tax. If Australians are prepared to pay more for a digital product then it makes sense for the seller to charge more.

Imagine a law that says, "The price of Photoshop in Australia cannot be more than the price in the US". Wouldn't that law be economically similar to one which says, "The price of Photoshop in Australia cannot be more than $400"?

I don't agree with a law limiting pricing on luxuries, which most software is. I also don't agree with stopping people from bitching about pain points, getting their message out there. Companies are free to price-gouge for non-essential items, and we're free to roast them for it.

The rate of piracy in Australia suggests they're not willing to pay more in a world of free bits.

Except, we aren't. The only reason we do buy at exorbitant rates is because of geo-blocking, and we are fast learning how to bypass geoblocking.

I'm not really referring to that, rather the disgusting practice where publishers decide to sell the game 49 dollars in the US and 49 euros in Europe, while there's no reason at all for this difference of price (49 euros is way more than 49 dollars, plus salaries in Europe are usually lower than in the US, so it's like a double stab). And that's all happening in "first world" countries. Valve should not allow this kind of things.

>while there's no reason at all for this difference of price

You sure about that? I have a strong suspicion that taxes/tariffs make up a significant portion of that.

If that were the case of taxes/tariffs then the real price should be depending on your actual country and not the continent as a whole. Even in the US there would be no single price either, since there are some states where there is no VAT compared to others where it's quite high. So, yeah, i'm pretty sure it's a way to make easy money for the publishers. Sad to see Valve supporting this, really.

They don't have VAT in the US, and their sales tax is a bit different. I'm not sure if it applies to digital purchases.

However, the price difference is often larger than what taxes alone would suggest, but surely localization plays a part here. Still, many European countries would need a reduced price just like the developing countries (to a lesser extent) to have an equal purchasing power compared to the US.

And don't forget, £49 in the UK!

You are right, I forgot this infamy as well !

There is nothing wrong with price discrimination. Companies are trying to maximize their revenue.

Except that it's illegal for me to do the reverse. It should be legal for me to buy x from the us if it's cheaper there then here

How is that fair?

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