Off. Not abs. Ripped off is how some audiophiles feel when asked to pay more for a piece of gear than its review suggested with its published retail price. I recently got an e-mail from a Swedish reader pointing out that an amp we reviewed which sold for <$2,000 in the US was nearly double in his country. This merits a quick inspection.
Value-added tax in Sweden is 25%. That doesn't include import tariffs or shipping. Nor does it include any distributor margins. Why feed the distributor from your own wallet? Because self importation, if it's a credible brand, won't be possible. Especially with tube gear or CD players, it won't be advisable neither since any repairs mean overseas shipping, downtimes, possible transit damage/loss and of course, all associated costs. If you're living in the EU and buy non-EU kit which you must re-export for repair, you'll have to register its serial number first with customs or you'll be assessed a second VAT fee when it returns. Which you will be in fact if what returns is a replaced rather than repaired unit with a different serial number. Hallelujah and talk about bloody hassles.
As it turned out, the particular amp our reader referenced was sold in the US without a proper distributor but rather, through the Pacific Rim manufacturer's own US facility. Instead of pocketing the distributor markup, the manufacturer turned the savings over to the consumer. With no American VAT and no distributor margin, the amp could sell for nearly half as in Sweden where this maker has no own facility and relies on an official importer.
Now we're at the meat of the issue. The manufacturer has two choices. One, he looks at his annual sales worldwide, averages the cost of doing business and assesses a one-size-fits-all retail price around the globe. Mind you, this does not protect him from unforeseen currency devaluations, especially when his sales suddenly spike in countries whose currencies experience strong padding that year versus the currency of the manufacturer's country. Two, he creates retail pricing from country to country based on individual currency, customs and VAT tarrifs.
If you're a newer manufacturer with very spotty distribution still, option 1 is fraught with potential problems. Say your averaging didn't account for countries like Sweden or Israel where fine import hifi gets hammered by high taxes but suddenly a new Swedish importer does a crackerjack business that year. Your profits necessary for survival could take a serious hit.
Option 2 suffers serious perception problems with consumers who feel ripped off by you or your import agents because retail pricing fluctuates from market to market. Cynics might say a manufacturer is screwed no matter what. That's overstating of course. This brief report merely wants to point out two basic approaches that are practiced concurrently in the market, with one brand costing the same no matter where you buy it (consumers in 'cheap' countries paying an inbuilt surcharge to counter sales in 'expensive' lands), another seeming to offer unexpected deals in certain countries whose prices are noticeably lower. There's no hanky-panky involved, just two decisions on how to deal with cost offsets in global shipping and importation tariffs. Don't focus on feeling ripped off in the second case. Focus on your abs if their transient response is getting soft and poorly articulated.
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