Prices in Australia versus the USA Part Two

I read an article last week written by Jessica Ervine who says she has fallen out of love with her iPhone, because she is fed up with being ripped off. Ripped off, she says, because she lives in Australia and Apple’s prices are far more expensive here.

It’s not just Apple, she says its also Microsoft and Hewlett-Packard, amongst others.

Now, I really don’t want to open this can worms again, I got into enough trouble when I wrote my post The Cost of Living: Australia and the US Compared. That one caused a bit of a rumpus, I can tell you, and one commenter accused my hard yakka of being “a tool that sympathises with corporate and government greed & incompetence.

greedYeah, right, as if! Anyway, what did Jessica have to say?

Over at the Courier Mail, they had a fancy graphic, me, I’ll just have to type it all out by hand. Here are the prices she wasn’t happy with…

Prices of stuff in Australia:

  • Apple MacBook Pro (13 inch: 2.5 GHz) – $1349
  • Apple iPad (Wi-Fi plus Cellular) 16 GB – $679
  • Apple iTunes new release music singles – $2.19
  • Call of Duty: Modern Warfare 2 Game – $89.99
  • Microsoft Windows Vista Home Basic (complete) – $385
  • Sony 8GB Video MP3 Player – $319
  • HP OfficeJet Pro K8600 printer – $599
  • Microsoft Excel software – $189
  • Microsoft windows 7 Home Premium (Full version) – $299
  • Microsoft Office for Mac Home and Student 2011 Family Pack – $199.95

Total Cost – $4111.13

I went looking for the same stuff to see how much I could get it for here in Australia. I didn’t search hard; I picked whatever came up at a reasonable price on page 1 of Google.

Here’s how much I could have got this lot for; my prices are in the same order as the above:

  • $1139
  • $594.82
  • $2.19
  • $28.99
  • $346
  • $80 – $192.51
  • $549
  • $129
  • $257
  • $169

My Total – $3295, to a maximum of $3407.51, depending upon which Sony 8 GB Video MP3 Player she was looking at.

Talking of that Sony 8 GB Video MP3 Player, including it in her figures was pretty meaningless; there are a zillion different model numbers and prices for Sony 8 GB Video MP3 Players. Honest!

Well, all right, there’s more than one then. Anyway, I have no idea exactly which product it was and couldn’t find anything quite that expensive here.

Incidentally, everything in the USA was cheaper, the total over there (I didn’t check her prices, took her word for it. Why? I don’t know…) was $3112.63. You can see the full details of those prices over at the Courier Mail.

Not much in it now, is there? And maybe Jessica should come shopping with me next time. There is also a question mark about sales tax in the USA, I’m pretty sure that online prices exclude the tax until they know which state you come from, and then it’s added on.

That would be a real leveller, wouldn’t it?

So how could her prices be so drastically wrong?

The answer seems to be quite simple. If I look at their fancy graphic, it says that the source of these prices is Choice, a consumer watchdog, from June 2012.

Let me remind you, this article appeared last week. If somebody wants to announce to Australia how badly we are being ripped off, wouldn’t it be nice if they were to do their own research? Or at least use up-to-date figures?

I don’t know if the goods in America have gone down in prices since June either, but what I do know is that quite a few people want to bang on about how expensive it is here in Australia and, of course, it rubs off on the population.

Bad news sells, but it also puts people in a bad mood. I’m not trying to say Australia is a “cheap country”, but most of us wouldn’t really enjoy living in a country where a loaf of bread is 10 cents, when you can get it. The message I want to put across is that we live in a modern country with normal prices.

That’s all.

For me though, the writer of this article answered her own question when she asked “Have you ever wondered why drinks at trendy inner city bars cost wildly more than the same drink in a pub in the suburbs, even though transport costs would presumably be lower to the inner city? It’s price discrimination.

No, it’s not, it’s called overheads AND what the market will bear.

Of course a bar in an outer suburb is going to have lower rents, rates or whatever it is they pay. I think all of us would hope a drink in a dingy bar with threadbare carpets and worn out furniture would cost less than somewhere in a trendy designer decorated bar in the heart of the city with a resident DJ along with a top quality sound system wouldn’t we? (Gasps for air.)

Cigarette smoking has increased in Africa; do you think that would have happened if they were $20 a packet? How can the tobacco industry sell cigarettes for $3 a packet in Nigeria?

Because it’s what the market will bear and overheads (government taxes included) are low.

I’m no big fan of Apple or Microsoft, no fan at all actually, but this sort of thing has been going on forever. The market will pay what the market will bear and we all need to live with it. So let’s not whinge and moan about the price of stuff in Australia when wages are so high here and, frankly, those of us lucky enough to be here shouldn’t really have too much to whinge about, from a global perspective.

But then, maybe that’s why some people pick on prices.

I’ll stick with my hard yakka theory.

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{ 25 comments… add one }
  • BobinOz June 17, 2013, 1:26 pm | Link

    Good point Ernie, and as Linka says, people may scoff because tax in Sweden is very high but that on its own means nothing (which was another good point Linka). You might actually get a lot for that extra tax which means you get to keep more of your earnings in your pocket.

    Then as you said Ernie, in the USA people might have slightly more money in their pockets but because the tax doesn’t cover some essentials like health care, then you are going to need to spend more of it.

    There is far more to the cost of living in places than just the cost of stuff, that’s for sure.

    Cheers

    Bob

  • Ernie in AZ June 15, 2013, 1:54 am | Link

    Just for fun, I checked out Wikipedia’s list of countries by Purchasing Power Parity (PPP).

    http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita

    Granted, comparing countries by PPP isn’t an exact science, and it doesn’t necessarily show average wages, but it is generally a good indicator of a country’s standard of living.

    There are four organizations that publish their own lists, since PPP can be a bit arbitrary, so I took the average of the four to see how Australia ranks compared to the US. In the US the average purchasing power is about $48,601 while in Australia it is $44,119. So on the surface, Americans have $4,482 more to play with every year than Australians. That should mean that Americans have a higher standard of living, right? Not so fast!

    Purchasing Power Parity is an AFTER tax measurement. It reflects how much goods and services can be purchased after taxes have been taken out. In America, medical coverage is considered a disposable purchase, no different than buying a car, a tv, or a sandwich. In Australia, unless you have private medical cover, healthcare is funded through income taxes and the Medicare Levy . . . taxes.

    Factoring in the purchases you would have to make in America that are included in Australian taxes, such as healthcare, student loans (no such thing as a Commonwealth Supported Student here), student loan interest (no HECS-HELP in the US, I currently pay 6.5% on my student loans. Also, loan repayments are administered through the ATO and are considered taxes), retirement savings (no superannuation in America), suddenly that $48,601 number starts dropping fast.

  • Linka June 14, 2013, 10:43 pm | Link

    Well I’m glad you explicated your “hard y****” (sorry, can’t even bring myself to write it haha) theory on the blog. A very astute point and one that should always be kept in mind when considering the cost of living and conditions in any country. It’s all about what you get for how hard you work.
    Like how people flippantly scoff that Sweden, for example, has extremely high income tax. Yes, but so what? That fact alone means nothing, just like noting that some or even a lot of things may be cheaper in the USA.
    The Australian and American dollar may be on fairly equal footing these days, but considering HY, I’d say it’s more like 1:2.5 in our favor!

  • Linka June 14, 2013, 6:49 am | Link

    Oops, quick draw on the submit button. Cont’d.

    You walk into a restaurant and upon glancing at the menu realize, great, everything IS a bit cheaper.
    Ah, but wait for it… When the check comes, add tax (~6-10%), and tip (if it’s been added for you, it’ll be 18%). That’s more than 25%! Cue simmering rage after the 10th time this happens.

    Clothing. There are just as many chain stores and department stores here as back home where you can find perfectly nice clothing, for 5, 10, 20 $
    You know what IS cheaper here? Designer clothing (and shoes, and accessories…) But if you’re happy to pay $100 here instead of, say, $300 in Aus, guess what? That’s still expensive, and if you’re supposed to be on a budget, you’re doing it wrong!

    Groceries. Here’s what I’ve noticed – snacks, fast food, processed food, etc. are indeed cheaper here, that is, not on sale! You can sometimes find the same things for a similar price in Aus, it just takes a bit more effort because you have to wait for a sale, maybe think to stock up, etc., whereas here the standard retail is already lower.
    HOWEVER “real” groceries, I’m talking fruit, vegetables, meat/poultry, cheese, etc. are about the same. Except fish for some reason, which is almost always cheaper here. Strange.
    But keep in mind that the tax isn’t included here either, so you’re paying more than you think once you get to the register.
    [Side note, but importantly, even if Aus works out a bit more expensive in this department, it’s worth it. The milk here takes about a month to go off. I have some vegetables in my fridge that have been neglected for about 3 months at this point. They still look as fresh as the day I bought them. Terrifying. I’ve been having some bizarre health issues since moving here and I’m sure all the who-knows-what-crap they’re putting in everything has played a part… :/ no wonder it can be cheaper. And
    if you’re going to shell out for organic stuff then it will cost much more than in Aus.]

    Here’s a good quick one. Cars. Yes they’re cheaper here. But again, listed prices don’t include tax. Even so… petrol is a bit cheaper, but insurance is insane.
    Which brings us the obvious: education and healthcare. Thousands, tens of, even hundreds of thousands here. Practically free in Australia.

    Don’t even get me started on rent and utilities here.
    Let me just mention that one of my wintertime heating bills came to $200 FOR 3 WEEKS.
    Oh and trying to find and organize deals and discounts is excruciating because the customer service is usually appalling.

    That is all. Too angry to go on haha
    Can’t wait to go home!

    [All this and people here earn about half as much as people in Aus. Ignore statistics, median income figures means s**t here because the distribution of wealth is sm skewed, and that’s not just a statistical fact, but a very real and obvious reality that surrounds you when you live here…]

    • BobinOz June 14, 2013, 8:18 pm | Link

      Very interesting post, or should I say posts Linka. Milk that stays fresh for that long would scare me as well!

      From a distance, the USA looks like quite an affordable country to live in, but, as you say, when you take into account salaries, taxes, tips, and maybe sometimes even the quality (I’m talking in terms of that ever fresh milk those veggies that don’t go off) maybe the prices aren’t so good after all.

      Look on the bright side though, only 48 days left 🙂

    • Ernie in AZ June 15, 2013, 1:50 am | Link

      I think Linka has a great point, in that America is certainly not as cheap as it seems. Another point to make in this debate is that, in America, a lot of everyday things do cost less, but you have to buy so much more to maintain a decent quality of life.

      For instance, petrol is cheaper, but distances are greater and cars don’t get as good economy, so you end up buying more. Also, since most American cities have abysmal mass transit (I live in a suburban city of Phoenix, and the closest bus stop to my house is 34km away), people are forced to buy multiple vehicles just to get to work, school, shopping, etc. So, cars are cheaper, but you are forced to buy two or three for your family.

      Even things that you wouldn’t think you have to pay for, you do here. My city doesn’t have a fire department, so a private company does it. My fire service subscription costs me about $1,000 a year. That fee just doesn’t exist in Australia.

      Another great point that Linka makes is that, even though things may cost more in Australia, it is worth it. Yes, fast food is cheaper in America, but the workers are paid $7.25 an hour, have no healthcare coverage, don’t get any paid vacation days, holidays, or sick time, and no retirement (superannuation).

      I think just comparing prices can be a bit deceiving since there is so much more to the story of which place is cheaper to live in.

      • BobinOz June 17, 2013, 1:39 pm | Link

        Gosh, 34 kilometres to your nearest bus stop? You have to pay a fire service subscription? That’s quite incredible and along with your other points, it’s easy to see how the USA can change from looking inexpensive on the face of it and then become quite expensive quite fast.

        Thanks Ernie, a bit of an eye opener for me.

  • Linka June 14, 2013, 6:19 am | Link

    Sorry to jump in on the discussion so late in the game. – a couple of things:

    To an earlier poster, if you’re on a budget, why on earth are you buying Apple products at all?? Anywhere you live, once you have the lay of the land and are smart about it, you’ll figure out where and how to save money… (e.g. get another brand of beer instead of James Squire, or something different altogether… Or if you insist on James, wait for a sale and stock up, etc…)

    Which rather brings me to my next point…

    Some background. I grew up in Australia and have technically lived there my whole life, but I have also travelled a LOT and lived for longer periods all over the place. In fact, right now I’m approaching a year of living in the States. And can I just say, for probably the first time in my life, I am truly proud to call Australia home, and I will be sure to appreciate it far more when I return (49 days to go!).
    Besides a multitude of issues with the States, as far as cost of living goes, my experience is that it is much more expensive here than back home. And not only that, but it’s… easier, simpler back home, if that explains. Let me try to explain with some examples.

  • aLouisianaYankee March 25, 2013, 9:18 pm | Link

    Oh, by the way, thought about buying a carton of James Squire today, seriously. At $49.95 for 24 beers, I chose a good wine instead.

    • BobinOz March 26, 2013, 10:12 pm | Link

      Coming from Louisiana, I would say you are lucky to live here. In Louisiana 7.7/100k are murdered with a gun. Here in Australia we have that figure down to less than one per 100k.

      To answer your question though, when I say “those of us lucky enough to live here” I mean everyone who lives here, irrespective of what my readership demographic is. I think everybody who lives here in Australia is lucky, it’s a fantastic country in which to live.

      Some people living here might be unlucky though, and there will be victims of crime here, there are everywhere in the world. That doesn’t alter the fact that I think people who live here are lucky, even though a carton of James Squires costs $49.95.

      • paul April 13, 2013, 10:57 am | Link

        Hey Bob,
        I didn’t write back immediately, believing we pretty well fleshed this out, and concluding we probably just disagree, as reasonable people often do. Almost every day I have seen something on the news or in newspapers about the high cost of living here, so I admire your tackling this issue and going against the apparent grain. Here’s a link you might find interesting, about “average” wages; http://www.bbc.co.uk/news/magazine-17512040
        I re-read “Connecticut Yankee” and was surprised to see Mark Twain used the words “purchasing power” to explain the difference in wages between the North and South during the American Civil War. (Kindle, location 3321)
        I also didn’t want to even think about comparing the quality of life of one country with a high murder rate to a country with a high rape rate. I love the weather and beaches here, and miss the food and music in Louisiana.

        I did read of your wife’s wine recommendations, from 2009. Since that was over three years ago, does she have an update for the newly arrived?

        • BobinOz April 14, 2013, 9:04 pm | Link

          Yes, I know I appear to be going against the grain, but “Australia isn’t as expensive as all that after all” doesn’t sell newspapers as much as whingeing on about how tough it is and how expensive it is here.

          That’s the press and media for you, fear always sells more than happiness.

          I took a look at my wife’s wine list from 2009, it’s interesting that it doesn’t include a sparkling dry white wine called ‘Brut’ from ‘Seaview’ who are a winery in Victoria. It’s her current favourite, and has been for a while, and works out at about six dollars a bottle.

          Cheers

          Bob

  • aLouisianaYankee March 25, 2013, 8:59 pm | Link

    Hey Bob, I appreciate your taking the time to respond to my comment, and am sorry that I wasn’t clear. My point was that maybe it is possible that your readership includes many working expats, and that many of those, like the average American expat in Australia, actually makes more yakkas than the average Australian, and that in making more yakkas, does indeed feel lucky. If that is the “us” in “those of us lucky enough to live here,” then I don’t disagree. If your readership is broader, and I include myself in that group, then perhaps this assertion becomes more problematic. I know the 2006 data is old, it’s just the data I happened to run across specifically comparing American born to Australian born incomes. Some groups, lets say for instance, retirees reading your website, could be mislead by such a statement, and need to be leery of the relatively high cost of living here. I have found your website to be a good source of information, which is why possibly why I find myself responding. “Lucky enough to live AND work here,” perhaps more fitting. Even then, yes other groups such as the working poor, may struggle, as in most countries, possibly no more or less lucky to live in Australia, than, I don’t know, Germany possibly. If “lucky” is meant only economically, then I have no further observations, but if we look at say, the risk of a woman being raped, then Australia, at 92/100k is not as lucky as for women in the USA, at 29/100k, (http://www.civitas.org.uk/crime/crime_stats_oecdjan2012.pdf, or http://en.wikipedia.org/wiki/Rape_statistics). My primary point is that, when it comes to life in most developed countries, individual circumstances probably matters more than the country one lives in, Spain, Australia, France, England, USA, or even California, and if that is true, then “lucky to live in Australia” means as much as being lucky to live in Spain, or the USA, or the UK, or….

  • aLouisianaYankee March 22, 2013, 3:40 pm | Link

    Since your blog, an interesting report, here:

    http://www.news.com.au/technology/biztech/apple-defends-high-costs-technology-prices-australia/story-fn5lic6c-1226602766888

    I know you comment about “those of us lucky enough to live here,” but I take issue with that when you are on a tight budget and very worried about finances. Good topic though, thanks.

    • BobinOz March 22, 2013, 9:34 pm | Link

      And I stand by my comment “those of us lucky enough to live here”; I think Australia is a great country to live in and if a few non-essential gadgets cost more here than elsewhere, so be it. The extra price is mostly more than compensated by the higher average earnings here. Interesting link though, thanks for sharing it.

      Bob

      • aLouisianaYankee March 23, 2013, 11:04 am | Link

        Hey Bob,
        One look at Australia’s stats certainly support the “lucky” to be here comment, “at large,” if you will.
        Eg. http://www.news.com.au/national-news/how-would-your-life-compare-australia-vs-us-where-it-counts/story-e6frfkvr-1226196606062
        My comment hints at different experiences for different groups of people living here, that it may in fact be difficult, for different reasons. An interesting stat, was this, of Yanks making more than Ozzies, here in Oz. An expat group making more money, such as possibly might read your blog, might find things easier than those making less.
        Eg. Median income
        At the time of the 2006 Census, the median individual weekly income for the United States of America-born in Australia aged 15 years and over was $649, compared with $431 for all overseas-born and $488 for all Australia-born. The total Australian population had a median individual weekly income of $466. (At http://www.immi.gov.au/media/publications/statistics/comm-summ/textversion/usa.htm) There was also that recent expose on the squalid conditions many immigrants live in. “Lucky” might not apply to many people here, as in every country.

        • BobinOz March 25, 2013, 1:25 pm | Link

          I have no idea what your point is or what that median income statistic is all about. The last time I looked, the national average for income here was something like $68,000 a year, that’s about $1300 a week.

          Sure, we have poor people here who struggle, tell me a country that doesn’t?

  • Ernie in AZ February 24, 2013, 2:34 pm | Link

    Hi Bob, here is a great website that compares the cost of living on a city by city basis:

    http://www.numbeo.com/cost-of-living/comparison.jsp

    Comparing Phoenix, AZ (my current city) and Adelaide (where we’d like to move to), it says that prices are 53% higher in Adelaide. It also says that after tax median monthly disposable incomes are only 41% higher in Adelaide. So, just from this, you could say that Adelaide is a more expensive place to live in than Phoenix, however I think there is more to this story than what these numbers show.

    No discussion of the cost of living in America can be complete without taking into account the incredible cost of healthcare over here, and that website doesn’t factor any of that in. For most Americans, healthcare is an after tax, disposable purchase, while in Australia, Medicare is funded primarily through taxes. Now, it is true that many Australians purchase private health insurance, and even with Medicare there are out of pocket expenses, however for most Australians healthcare is a government service funded by taxes.

    If what Americans paid for healthcare were to actually be considered a tax, like everyone else around the world, the US would suddenly not seem like such an affordable place to live. Last year my wife and I had a baby, and even with insurance coverage we had almost $10,000 in out of pocket medical expenses. In 2011, the average out of pocket medical expenses for an American family was $8,000. When I factored in my healthcare costs into the cost of living comparison between Phoenix and Adelaide, I found that that after tax disposable income in Adelaide jumps up to 88% higher than in Phoenix.

    So, factoring in healthcare expenses, and also the hard yakka, Australia is actually a much more affordable place to live than the US.

    Keep up the great blog posts, Bob!

    Ernie

    • BobinOz February 26, 2013, 6:49 pm | Link

      Hi Ernie

      Thank you for a fascinating post, I’m sure my jaw dropped and my eyebrows popped up once or twice when reading it. Definitely the first time when you said $10,000 out of pocket to have a baby, and the second time when you say the the average Americans out-of-pocket medical expenses are about $8000 a year.

      Those are some meaty numbers!

      I’ve seen the numbeo website before, and I think it’s useful for holiday makers wanting to know the price of a coffee, loaf of bread or bottle of wine. As a serious comparison when choosing a country to live in, I think it has flaws and you have pointed those out very well.

      I think everybody considering a major move should look very closely at what they usually spend their money on and then try to find out how much those same things would cost in the place they are thinking of moving too. Well, just like you’ve done 🙂

      Thanks Ernie!

      Bob

  • Patrick February 21, 2013, 11:26 am | Link

    People keep telling me Australia is expensive… I’m getting tired of repeating that prices are, like this article indicates, about just the same as here, except rent and maybe cars. And that wages are 50% higher… Hard Yakka works for me.
    Saving accounts interests are way higher too, the best I found here (Quebec) was 1,1%, I opened one down under instead, at 3,75% with the first four months at 5%… 🙂

    Cheers
    P.S. 145 days 😛

    • BobinOz February 21, 2013, 8:33 pm | Link

      I reckon wages are about 30% higher than in the UK, so maybe you’re right, maybe they are 50% higher than where you are.

      Cheers

      Bob

  • Denis February 21, 2013, 8:08 am | Link

    Congratulations for this article and for the whole blog. I’m reading your blog for some time, but now I really needed to comment, as you made another pertinent opinion about the prices and lifestyle in Australia. You are a valuable source of informations All my best.

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