The Price of an iPhone in Europe: $562 and Rising

In the U.S., the cost of an iPhone has fallen sharply since it was introduced nearly three months ago, from  $599 to $399, thanks to Apple's (AAPL) famous September price cut.

In Europe, the situation is reversed. The devices don't start shipping for more than a month, but iPhones there are already more expensive than they were just a few days ago -- thanks to the falling value of the dollar.

Steve Jobs had priced the phones high to start with, building in the 17.5% value-added tax (VAT), the cost of doing business overseas and a fudge factor to cover currency fluctuations. So far, those fluctuations have worked against the dollar, as the chart below suggests.

Bottom line: an iPhone in Europe today is 40% more expensive than the same phone in the U.S.

Comments

[A Yung]

Do you even attempt to write something that is useful.
"So far, those fluctuations have worked against the dollar, as the chart below suggests." That is a stupid statement.. from who's perspective that it is "against" the dollar and what is the significance?

[top_tier]

This is probably the real reason the iphone price was cut in the U.S. to begin with.

Think about what the comparable price would have been in the EU when adding the VAT and compensating for currency rate fluctuations. Without he price cut the iPhone likely would have been unmarketable in the EU. Another smart "thinking ahead" move, or should we say "plan" by Apple management concerning the iPhone marketing plan.

[Darryl]

That's exactly what I was wondering. What the hell is the significance of this? And the only other links here are for other Apple bashing articles. Dude, did you put all your money on AAPL, gambling on the double-top that never appeared?

[Barrett]

I agree what is with all the bashing. Apple is making the best products and the iphone is the best phone on the market right now by far. blackberry, blackjacks, they all look the same and there lame to be honest. Who cares in the US how much iphones cost in Europe? I not going to bring my US dollars to Europe and buy an Iphone. I think its time for everyone to write about how apple products are the best from MP3 players, to computers and now to phones..... just jump on the wagon.

[RL]

DeWitt, you need to get a life.

[Peter]

If you take out the value added tax, the iPhone is only $50 higher in Europe. I am sure you cannot vouch for no rise in the dollar in the future. Taking into account the additional cost of doing business in Europe, $50 sounds reasonable. I don't see the point of your article.

[Bluejade]

Shame on you

Major flaw of this article is comparing different numbers - american prices are always without VAT while european always include VAT and import fees. Also the VAT is almost double in Europe. So when you do the math the price difference is somewhere around -+30$ That is not so bad as you would like us to think. Shame on you once more : )

[anon]

Dear Elmer F.U.D.:

1. You need to go back to school as sales tax is added to the purchase price here, and included in the purchase price in Europe (the Value added tax, VAT). Which you neglect to include in your 40% more expensive statement.

2. Did Apple or the carrier announce new pricing since their press conferences? Didn't think so. The announced price is in your photo, expressed in Pounds. Chances are people are going to pay for iPhones in Dollars converted to Pounds over there, ya' think???

3. Who pays you for these articles? They are universally poorly researched and uniformly slanted negatively.

[kjj]

It seems that you get great joy in not only bashing Apple but allso in your statement "the falling value of the Dollar". Of course Europe is going to pay more for the Iphone, they get great pleasure in devaluateing the US dollar against the Euro, and bitch about it when they have to pay more. So if there Euro is so god all mighty, and if the want some Quality Apple Tech, they should have no problem paying that extra. They should be smileing when they pay that extra since there Euro goes so much farther than our poor weak American Dollar. "Ask anyone in the world which they would rather be paid in? the Euro, or the Dollar, watch them grab those green backs!"

[Kris Jones]

The only reasonable way of comparing the prices in the EU is to take away the sales tax. In the UK, our Value Added Tax (VAT) is 17.5% (not 17% as stated in the article). Taking that away from the retail price of an iPhone gives a price of approximately £221 or roughly $442. So, the actual price differential is approximately $43. That isn't bad considering the costs of (limited) localisation, import costs and the higher wages that apply here in the UK. However, were we really get stung is in the network charges, which start at an equivalent of $70 per month. The mobile 'phone market is highly competitive over here and people aren't used to paying a full price for a 'phone, £35 per month and being locked into a contract for a full 18 months. That may mean the iPhone struggles to achieve the stellar sales that it has managed in the US.

[John Smith]

How about taking the VAT off the phone before compaing prices. Using official rates that makes a $43 difference.

[SF]

Yes, this article is slanted. Price of a good phone in Europe is never under 400-500 dollars and, as far as I know, 2-year contract deals that buy you a 400-dollar phone for 100 is not a common practice in Europe. Indeed, the European price of a gadget (not just a phone) like iPhone is a good deal for a European and since Europeans seem to appreciate tasteful designs and clever functionality and have a much stronger purchasing power these days, the iPhone is going to sell a lot there.

ex ped: Where are you getting your European phone prices? This is from MarketWatch yesterday:

"on O2's website, 16 out of 18 handsets are free, and no other handset costs more than £90. On Vodafone's consumer website all handsets are free with a contract of more than £35 a month."

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BC9248AD7-621E-4E87-A5D1-5A28526C87C9%7D&siteid=nbk
--Philip Elmer-DeWitt

[Andrew Thompson]

Two important points to make

1. VAT in the UK - this has already been well covered in this thread.
2. The comparison has nothing to do with the dollar vs. the pound. The price of the iPhone should be calculated as the dollar vs. the yuan and the pound vs. the yuan and the cost differences resulting from the two countries trade agreements with China. The iPhone is not made in the US it is just designed there.

[gmac]

so, yes the yuan may be a more accurate way to figure the cost of production to market for the iPhone worldwide, but as the author want to compare things in by dollar amount here is another example

based on current price 269pounds versus dollar exchange rate. here in Hawaii, INCLUDING state tax mind you. the equivilent dollar price would be $394. not to mention the dollar is getting weaker each day.

if anything, the US iPhone base has something to complain. the early adoptors were only given $100 credit on their iPhones. UK and the european customers donʻt have to worry about that price slash happening.

[john]

You are so stupid.
You must remember iphone is an export product from U.S. If Apple sells iphone at its preset price in euro, Apple will get more dollar in return because of dollar depreciation. Therefore, the margin increases in europe per iphone sold. So Apple can actually reduce the price it charges in europe while maintaining same dollar profit.

[WB]

I'm trying to block everything that ever posts on Business 2.0 because it is just stupid dribble.

The cost of the iPhone is NOT changing in Europe. It is 399 euro, it was announced 399 Euro and has stayed that way. You've written such a stupid article you make it sound like a weak dollar makes the iPhone cost more when it really means Apple makes more money, higher earnings, by doing business overseas.
This is a great thing for Apple, a 399 Euro price and more and more money coming to them.

Wake up you guys, and stop sounding so stupid.

[gmac]

oops sorry i calculated for 269 being in Euros. excuse the mistake there.

in Hawaii (including tax). that would be $563. wow. i think you should have the govʻt weaken the pound so your iPhone would be cheaper.

i think itʻs a fair shake. having visited the UK versus Europe. I never felt more compelled to view McDonaldʻs as expensive until i got to the UK. And i HATE McDʻs. Everything is expensive in the UK! So, yes, please feel free to cut the pound in half. i can visit your country without sleeping on the street.

[James Katt]

This is a useless argument.

Everything in Europe is higher priced when compared with the dollar. However, Europeans don't see the price difference. They just gleefully realize that if they travel to the U.S., everything is about 50% off in price compared to the U.S. or even cheaper.

An 8 ounce bottle of Coke in Europe costs $6.00 or more to a U.S. tourist. But to a European, the price stays the same.

In the U.S., you can get a 12 ounce bottle of Coke for $1.00 or less.

Why not complain about the cost of soda? The difference is far greater than that of the iPhone. Thus from your argument, people are getting ripped off with the price of soda in Europe to a far larger extent than they are for the iPhone.

For people in Europe, the cost to them does not fluctuate and is the cost of doing business. To Americans traveling to Europe, the cost does rise but then blame Bush for this problem, not Apple.

[smokeonit]

if you take the 19%, yes!: 19%, VAT in germany into account the differnce is $56.22 right now... i calculated the $562 minus the 19% VAT and out came $455.22...

if it would come out @ an even $400 it would be better, but the $50 premium for germany is normal... we always get ripped off...

[smokeonit]

james katt:

where i buy my cans of coke i pay €0.65 for .33l which is ruffly 8 fl. ounces...

i don't know where you buy a can of coke for €6... no idea...

[Nick Davich]

This is an absolutely "stupid analysis"! The author convenieniently omitted the "state sales tax" from his US price and also omitted a dollar fluctuation in the US which of course doesnt't exist and goods can become either more or less erxpensive as can also European goods, taking only the rising side, absolutely stupid analysis!

[BT]

Shocking, another slanted article from Elmer-DeWitt. I have canceled my subscription to Business 2.0 and I continue to be amazed that Yahoo lists this in the news section of their website. This is not news, it's a blog that is clearly funded by shorts and bashers. The sad thing is that some poor, uninformed reader actually take anything that you say as news.

[The Real Phillip Elmer-Dimwitt]

So Philip, Steve Jobs and Apple are to blame for the VAT and the weak Dollar?

Just when I think you couldn't write a more idiotic, illogical bash of Apple, you continue to outdo yourself.

[smokeonit]

i disagree with the apple 2.0 bashing...

even though this and some other articels are not the best... most of the articles are very intersting!

[smokeonit]

--- It seems that you get great joy in not only bashing Apple but allso in your statement "the falling value of the Dollar". Of course Europe is going to pay more for the Iphone, they get great pleasure in devaluateing the US dollar against the Euro, and bitch about it when they have to pay more. So if there Euro is so god all mighty, and if the want some Quality Apple Tech, they should have no problem paying that extra. They should be smileing when they pay that extra since there Euro goes so much farther than our poor weak American Dollar. "Ask anyone in the world which they would rather be paid in? the Euro, or the Dollar, watch them grab those green backs!" Posted by kjj---

when i read comments like yours i think; hopefully the UK leaves the EU and never joins the €/euro...

on the other hand i know that there's a lot of people that don't think like you... living in the past and giving in to nationalistic impulses has gotten us nowhere.... the EU is the future and out strength...

and of course there's room for a lot of improvements...

[smokeonit]

£269 - 17% = €318 = $448
€399 - 19% = €323 = $455

between the UK and the EU germany price there's a $7/€5 difference...

need i say more???

[smokeonit]

im eant to write 17.5%... i calculated with 17.5% UK VAT.. not 17%...

sorry for my typo...

VAT rates in the EU as of 2007 (not complete):

EU € zone:

germany: 19%
france: 19,6%
italy: 20%
netherlands: 19%
spain: 16%
ireland: 21%
austria: 20%
portugal: 21%
finnland: 22%
slovenia: 20%

EU non € countries:

UK: 17,5
sweden/denmark: 25%
poland: 22%
czech republic: 19%

[Jim]

>>>Do you even attempt to write something that is useful.<<<

Since when does Elmer Fudd have anything useful on his blog? He copies and pastes everyone else's work and whenever he does attempt to write something on his own, he can only come up with few sentences of useless info.
ROTFLMAO!!

My boycott of GM, Samsung and RIMM continues since they support this site by placing ads.

[Nodack]

It's obvious that it is Elmer Fudds job to bash Apple every day in this blog. I have been trying to find the motivation behind it. Elmer Fudd probably personally could care less what Apple does, but it is his assigned job to bash Apple. This site is part of Business 2.0 which is part of CNN, which is owned by Time Warner.

Time Warner is the largest media conglomerate in the world, with holdings including The WB Television Network, CNN, HBO, Cinemax, Cartoon Network, TBS, TNT, America Online, MapQuest, Moviefone, Netscape, Warner Bros. Pictures, Castle Rock, and New Line Cinema, over 150 magazines such as Time, Cooking Light, Marie Claire and People, and the Atlanta Braves baseball team. America Online’s Access, America Online’s Audience, AOL High Speed (a partnership with BellSouth, Time Warner Cable, Verizon, and other DSL providers to offer broadband internet access.)

Time, Inc. controls:
Time Warner Book Group (with publishing companies The Mysterious Press, Time Warner Book Group UK, Warner Faith, Warner Vision, Warner Business Books, Aspect, and Little, Brown and Company (including Little, Brown Adult Trade, Little, Brown Books for Young Readers, Back Bay, and Bulfinch Press); Oxmoor House, Inc., Leisure Arts, Inc., Sunset Books, Books-of-the-Month Club, Inc., Southern Progress Corporation, Parenting Group, Time 4Media (publishes 17 magazines worldwide), Grupo Editorial Expansion (publishes 15 magazines in Mexico)

Over 150 Magazines: 25 Beautiful Gardens, 25 Beautiful Homes, 25 Beautiful Kitchens, 4x4, Aeroplane, All You, Amateur Gardening, Amateur Photographer, Ambientes, Angler’s Mail, Audi Magazine, Baby Talk, Balance, Bird Keeper, BMX Business News, Bride to Be, Business 2.0, Cage & Aviary Birds, Caravan, Center Street, Chat, Chilango, Classic Boat, Coastal Living, Cooking Light, Cottage Living, Country Homes & Interiors, Country Life, Cycle Sport, Cycling Weekly, Decanter, Ele (joint venture), English Woman’s Weekly, Entertainment Weekly, Essence (joint venture), Essentials, EXP, Expansion, European Boat Builder, Eventing, Family Circle (U.K.), Field & Stream, Fortune, Fortune Asia, Fortune Europe, FSB: Fortune Small Business, Golf Magazine, Golf Monthly, Guitar, Hair, Health, Hi-Fi News, Homes & Gardens, Horse, Horse & Hound, Ideal Home, In Style, In Style Australia, In Style U.K., International Boat Industry, IPC, Land Rover World, Leisure Arts, Life, Life and Style, Livingetc, Loaded, Manufactura, Marie Claire (joint venture), MBR-Mountain Bike Rider, MiniWorld, Mizz, Model Collector, Money, Motor Boat & Yachting, Motor Boats Monthly, Motor Caravan, NME, Now, Nuts, Obras, Outdoor Life, Oxmoor House, Parenting, Park Home & Holiday Caravan, People, People en Espanol, Pick Me Up, Popular Science, Practical Boat Owner, Practical Parenting, Prediction, Progressive Farmer, Quad Off-Road Magazine, Quien, Quo (joint venture), Racecar Engineering, Real Simple, Ride BMX, Rugby World, Salt Water Sportsman, Ships Monthly, Shoot Monthly, Shooting Times, Ski, Skiing, Soaplife, Southern Accents, Southern Living, Sporting Gun, Sports Illustrated, Sports Illustrated for Kids, Stamp Magazine, Sunset, Superbike, Synapse, Teen People, The Field, The Golf, The Railway Magazine, The Shooting Gazette, This Old House, This Old House Ventures, Time, Time Asia, Time Atlantic, Time Canada, Time for Kids, Time Pacific, TrandWorld Business, TransWorld Motocross, TransWorld Skateboarding, TransWorld Snowboarding, TransWorld Surf, TV & Satellite Week, TV Easy, TVTimes, Uncut, VolksWorld, Vuelo, Wallpaper, Wallpaper Navigator Webuser, Wedding, What Camera, What Digital Camera, What’s on TV, Who, Woman, Woman & Golf, Woman & Home, Woman’s Own, Woman”s Weekly, World Soccer, Yachting, Yachts, Yachting Monthly, and Yachting World.

AOL also bought iTunes competitor MusicNow more recently.

Apple competes wiith several of those companies mentioned so I guess Time Warner can afford to put Elmer Fudd on the payroll to bash Apple if it wants. Just don't lose sight of what his job is.

Unbiased reporting?

What are you kidding me?

General Electric is another one. They own NBC who isn't a big fan of Apple. MSNBC. The MS stands for Microsoft. Need I say more.

Who can you look to to get an honest unbiased story written about anything?

I don't have a clue. Media and business are one in the same nowdays and they all have a slant and it's all business. Truth and integrity? LOL

FOX News. You can't watch that show for five minutes without having no doubt in your mind that they report the news from a very right wing conservative Republican viewpoint.

My point is that everything you read or see has an agenda and nothing is written without heavy bias towards some product that someone wants to sell you or in Apple 2.0's case they want to write as much anti Apple material as they can.

Zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

[Jason]

My 8 year old is better at math than Dewitt. Go back to school Elmer.

[JS]

For people in Europe buying an item like the iPhone that is fixed in price (a price denominated in a non-dollar currency) don't care about whether the dollar is falling. They're buying in sterling or Euros, in which terms the price of the iPod is staying the same.

[FPA]

I give my students of Journalism at the University this blog as a case study of extremely biases, ill-informed 'news'. Usually the consensus is that the author could not be so ignorant as to not realize how biased his 'news' [or lack of them] are. Instead, it is clear that he is just paid to push a hidden agenda [along the lines of what Nodak has discussed above]. This is really a discredit to the journalistic profession. The sad news is that there may be people who think this is news just because it gets posted ...

[KaaJamm]

Anyway you look at it, Apple's iPhone is over-priced. Apple Inc. had to cut the price of it's iPhone by $200.00 stateside to increase sales. The price of $599.00 plus tax, plus a two year contract with AT&T put, a lot of people off purchasing an iPhone in the first wave release.

The same thing will happen in the UK and Europe. The price will come down after the first wave release and sales start to cool.

[Jim]

>>>I give my students of Journalism at the University this blog as a case study of extremely biases, ill-informed 'news'. <<<

CONGRAZ ELMER!!!

You made it big and now have become a case study.

A BASKET CASE STUDY THAT IS!!!

ROTLMAO!

ex ped: Hate to burst your bubble, Jim, but I very much doubt that anyone who teaches journalism at a university would think the word "news" is a plural noun, as this writer apparently does. --Philip Elmer-DeWitt

[SoCal Tommy]

Jsut becuase somenoe mis-types, does not maen that thye are not a Journalism instructor. Many college level instructors are from other countries and may easily mis-spell a word.

You're not off the hook so easily.

[SoCal Tommy]

Or even mis-apply the syntax, grammer, punctuation, etc. School ain't what it used to be.