Aral Balkan: Historical Archive — iPad UK Pricing revealed: may actually be cheaper to buy one in the UK

iPad UK Pricing revealed: may actually be cheaper to buy one in the UK

Apple has just revealed the UK pricing for the iPad. The 16GB, 32GB, and 64GB WiFi models will be sold for £429, £499, and £599, respectively. The 3G models will set you back another £100 (so £529/£599/£699).

In the US, the WiFi models are going for $499, $599, and £699 and the 3G models are $629, $729, and $829.

At first glance, if you perform a straight currency conversion, it appears that Rip-Off Britain is in full effect. A naïve currency exchange on xe.com (with the current exchange rate of 1 USD = 0.680831 GBP) reveals that the iPads should be sold for £339.26, £407.25, and £475.24 for the WiFi models and £427.65, £495.64, and £563.63 for the 3G models.

Thus, it appears (at first glance) that you could be paying anywhere from £90 to £135 extra for the privilege of buying an iPad in the UK. However, the numbers alone lie.

Factor 1: sales tax

The first thing to understand is that the US prices do not include sales tax, which could be as high as 8.25% if you're buying an iPad in California. Assuming that you are buying an iPad in California, the actual amount you're overpaying in the UK drops to about £60 to £90, depending on the model.

Factor 2: VAT

Whereas the US prices do not include sales tax, the UK prices do include VAT. If you are VAT registered, you can claim this back. When you factor in claiming 17.5% of the price back, an interesting thing happens: it actually becomes cheaper to purchase an iPad in the UK.

Thus, for a VAT registered business or individual, it's actually cheaper – anywhere from £13 to £42 – to buy an iPad in the UK than it is to buy one in California.

Comments

At least someone understands the price conversion correctly. So many people at the minute hating Apple for ridiculous prices. They've got them spot on considering how much of a rip off the UK normally is with goods. Oh and no I'm not an Apple fanboy standing up for them, just silly to see nerds rage over something they don't actually understand!
by Tom Sinclair on 2010-05-07 14:47:08
I think the best way is to compare the base prices without adding tax in. And in the US it can be bought without sales tax in say Delaware which has no sales tax at all. And for what it's worth, the like for like comparisons do not throw up some horrible numbers, just those that would be expected in a higher cost area like Europe (higher taxes, higher property costs, higher wages etc etc).
by Steve Oliver on 2010-05-10 14:58:09
You are falling into the same trap as you are trying to highlight. You can not compare 1 price with sales tax to one without. You are just doing it the other way now. Adding the sales tax onto the American price and removing it (the VAT) from the UK. If we take the UK price £429 and remove 17.5% we get ~£354 354 / 0.680831 (using the same exchange rate as you) gives us ~$520. Still $21 more expensive than the American version, without its sales tax as well. For the most expensive model at £699 we get ~$847 which is still $18 more expensive than the American version. So no, for a VAT registered person it is not cheaper to buy an iPad in the UK.
by Aaron Bassett on 2010-05-07 15:45:02
The sales tax in the US can be higher than 8.25. If you buy your iPad in one of Manhattan Apple Stores (such as the 24hr store on 5th Avenue) you will pay 8.375%. OTOH A 40 minute train ride to Stamford, Connecticut would reduce the tax to 6%.
by Andrew on 2010-05-10 02:09:49
I can't claim back the VAT in the UK. Remember it is only a small minority who could do so, and only in certain circumstances. So the tax thing is a big null/void for those people anyways. The point I was trying to make is we should be comparing Apples and Apples. If you want to compare prices with tax do that. If you want to compare without, then do that. But don't give one an advantage just so it supports the point you are trying to make. And for the record I don't think is trying to shaft its UK customers either, when you factor in distribution costs.
by Aaron Bassett on 2010-05-07 16:10:24
Hey Aaron, Can you claim back sales tax in the US like you can VAT in the UK? AFAIK (and I could be wrong on this), you can't. In which case I think the comparison makes sense. Of course, if you were to fly out there and then claim the sales tax back, then it would be cheaper but then you would have to factor in the cost of the flight, etc. which would not be a true economy. What I'm trying to highlight here is that there really isn't a price difference between the US and the UK and that Apple definitely doesn't appear to be out to shaft its UK customers.
by Aral on 2010-05-07 15:55:10
Interesting thinking Aral, what happens if you buy in the US, keep your VAT receipt and claim it back in UK? I suppose that's illegal anyway?
by Og2t on 2010-05-07 14:54:50
Aaron, the most important thing wrong with your approach is that you've completely failed to drink the apple flavoured kool-aid. If you had then you would realise what a magical device the ipad is in every little way, and not in any sense another dismal attempt to attack openness, freedom and everything that is good about computing. Seriously though, if you don't have an apple shaped hole in your heart then its quite hard to see what makes apple people think this way. it reminds me of scientology and is starting to get quite creepy.
by joshMx on 2010-05-07 23:02:43