No its not. One does not include VAT, other does.

In Dropbox example both include VAT. You can see this tendency clearly in digital games. When I worked with games pricing for MacOS, I asked why such a huge difference? Boss replied: "It is the easiest to force Europeans into premium costs".

There is even a chrome extension which shows how much a game costs in different countries on Steam website:

Buy Sid Meier's Civilization V

US: $29.99 (18.04 GBP)

RU: 249 pуб. (4.01 GBP) (78% )

CIS: $14.99 USD (9.02 GBP) (50% )

BR: R$ 44,99 (12.11 GBP) (33% )

UK: £19.99 (11% )

EU: 29,99€ (23.7 GBP) (31% )

AU: $69.99 USD (42.11 GBP) (133% )

-----

Also not long time ago there was an article about Spotify pricing [1]. It simply is a many years ongoing Europe rip-off.

[1] - http://mts.io/projects/spotify-pricing/

One of the neat things about this is that it sometimes produces arbitrage that people leverage if the game does not have geo-restrictions built in. People will purchase in bulk and then trade.

For services like Spotify you do have to account for different delivery costs they may have in Europe. Bandwidth is more expensive over here (partly because it just is, and partly because in many places we are not as well served so it is a more contended resource) which they will have to factor in.

There may be differing costs for payment processing too, and if they have any sort of tech support and documentation there will be larger internationalisation costs in Europe too.

These things are unlikely to explain all the difference (probably not even close to half of it) but we need to consider these thing to make sure we are being fair when shouting "rip off!".

Bandwidth is cheaper in Europe. See the Cloudflare article recently.

Also, regarding i18n for Europe: most of the time, it is localized only for FIGS (France, Italy, Germany, Spain). Other 20 or so (for EU, not Europe) countries get shown a finger. So why should they pay for that?

It would appear that my knowledge on relative bandwidth costs is either very out of date (or was just plain wrong to start with)...

On internationalisation: fair point on those that don't get the effort, though some effort being made is better than none.

> Bandwidth is more expensive over here

Do you have a source for that? According to this [1] Europe has by far the cheapest bandwidth in the world

  [1] http://blog.cloudflare.com/the-relative-cost-of-bandwidth-around-the-world

> the relationship between the dollar and euro have changed

The Euro has never gone below $1.17, and has averaged at around $1.32 since Dropbox launched in 2008.

> it accounts for VAT

Dropbox don't pay VAT in the EU. https://www.dropbox.com/help/971

The whole area of VAT in the EU, for companies like Dropbox, changes on January 1, 2015. Dropbox will not be able to state that they don't pay VAT in the EU after this date as the rules will have changed. They will have to start paying VAT based on where their customer is located in the EU, e.g. German Dropbox customers will have to pay German VAT (19%). Hungarian Dropbox customers, meanwhile, will have to pay Hungarian VAT (27%). Dropbox will have to decide whether to pass on the price differential or absorb it. Interesting times.

How will that work for the companies? Will each company have to register and remit payment to every country in the EU that they have customers for?

The affected companies will have two options. Register for VAT in each EU country in which they have sales, or avail of what is called a mini One-Stop Shop, commonly known as MOSS. MOSS, effectively, allows a company register with one EU tax authority for the filing of all their VAT. That tax authority will then distribute the VAT due to other EU member states. MOSS will eliminate the need to register in every EU member state that an affected company has sales (could be all 28 of course). For some clarity try these sites: http://www.hmrc.gov.uk/posmoss/ http://blog.taxamo.com/moss-system-eu-vat/ http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_wo...

I'm interested in how this would work. Where would the VAT go in the case of a German person who primarily lives and works in the UK? Is it based on their IP address at the time of signing up? Or where their banking address is registered?

EDIT - Just found this, which suggests it's up to the company themselves to decide in which country the service is being 'consumed', and they need to store evidence which shows how they make that decision. http://www.hmrc.gov.uk/news/one-stop-shop.pdf

Correct, the burden of proof is on the company that is supplying the electronic service. But it is not that they 'decide'. They need to collect required types of evidence (that do not conflict with each other) in order to prove where their end customer is. Accepted evidence includes the customer's IP address; their fixed landline; their mobile phone SIM card country code; and credit card billing address. VAT is based on where the service is 'consumed'. That German person who resides in the UK will have to pay UK VAT on any electronic service that they consume in the UK. There are a whole host of other rules if that person goes on holiday in the EU.

EDIT: If some of the evidence above 'conflicts' with the other, e.g. UK fixed landline but a German credit card billing address, then more evidence will be required until the merchant is satisfied as to the customer's precise location.

Dropbox should be charging VAT in the EU. There is an 2003 EU law that states companies selling "e-services" into the EU must charge the VAT rate of the country of the EU customer. Dropbox stating the following doesn't remove them from paying EU VAT. https://www.dropbox.com/help/971

Usually a little more, so those Macbooks are actually about 10% more expensive than in the US once you account for VAT, but it's not unusual for the exchange rate to vary by up to 10% in any given 12 month period.

Most goods are typically more expensive in Europe than in the US for all kinds of structural reasons. Transport costs are higher, labor costs are higher, power and real estate costs are higher. It just costs more to do business over here. The first time I went to the states I was shocked at how cheap _everything_ seemed to be.

> They fix the price, it accounts for VAT and sometimes a little more, sometimes a little less.

Never seen less, always seen more. Significantly more. Take the top-of-the-line MBP without options, 2500€ is $3286, the german VAT is 19%. So a VAT-including US price would be $2975. There's a 10% ($311) surcharge for living in Germany.

Even though this true with regards to Apple products in the EU, be aware that in Germany you also pay a copyright levy on computers:

http://www.lexology.com/library/detail.aspx?g=5a3c6bfb-8d58-...

The price is the same in the French store, it is even more expensive (2525€) in the Belgian, Dutch, Italian or Spanish stores.

Even worst in Poland: $3278.17 (10499.00 pln in which 1973 is VAT).

All companies of a reasonable size deal with fluctuating exchange rates by hedging on the currency futures market. It's what those markets are for, and it works very well.

iPhone 6