Can geographical pricing survive the information age?
You thought Apple was ripping you off with the price of iTunes songs in the UK? You should see what Sony is doing!
There was heated furor over Apple charging different prices in the UK than elsewhere which got somewhat resolved recently when Apple standardized its iTunes prices across the EU.
The whole deal there was because people in the UK were paying at most 13p per song more than their European counterparts. But, because there was a considerable price difference between EU countries, the EU got involved. Unfortunately, no such action will be taken against Sony, who, as we say in the UK, is really taking the piss with their pricing because the EU has no jurisdiction over pricing differences between non-EU and EU countries.
So we're used to paying more for stuff in the UK but when does the price difference become ridiculous?
Is paying 50% more for something acceptable? OK, how about 100% more?
Hmm, how about more than 100% more for the same thing?
Case in point: I was browsing the online Playstation store on my PS3 and I thought I'd download Piyotama. At £3.49, you can't go wrong, right? Well something told me to read a review before buying it. I found a couple from US web sites but one thing struck me immediately. They all listed the game as being available in the US for $2.99.
Why's this strange?
Because with an almost 2:1 exchange rate, we're not used to seeing the actual price of an item be higher in the UK than in the US.
So Sony is selling Piyotama for $2.99 in the US and approximately $6.91 here in the UK. That's more than double the price!
For every one copy here, you could buy two copies of it in the US and still have enough left over to buy a double cheese burger at Burger King (though why you would willingly subject yourself to such abuse is beyond me!) :)
To cut a long story short, I know it's ridiculous but now I can't bring myself to spending a meager £3.49 on a game because I feel like I'm getting ripped off. How crazy is that?
Geographical pricing works as evidenced by the fact that I was going to buy the game without another thought. But then I found out how much it costs in the US and my opinion was radically altered.
To be effective, geographical pricing requires us to be in the dark about how much things cost elsewhere. Otherwise, it can very easily lead to feelings of resentment. No one likes to feel like they're getting ripped off.
What will be the long term effect of this resentment on a company's image? How will it affect customer loyalty when a competitor springs up that doesn't employ geographical pricing?
What do you think? Can geographical pricing survive the information age? Or is this walled-garden approach eventually doomed to extinction thanks to the Internet?