SPOnG caught up with Sony Computer Entertainment UK’s managing director Ray Maguire and spoke to him about, among other things, that £425 price-tag and to find out more about how many PS3’s are earmarked for the UK launch on March 23rd.
Maguire gave us a surprisingly full and frank description of the factors that go into deciding the PS3’s local price, citing VAT, exchange-rate fluctuations and the generally higher cost of living in the UK as contributory factors.
Firstly, we posed the question that’s on many consumers lips: why is the PlayStation 3 £425 in the UK when it is the equivalent of £300 in the US and £250 in Japan?
First culprit: VAT. Maguire told us: "There's a compulsion within the media to look at everything as a snapshot, and do a calculation, normally based on just the RRP in somewhere like the US and just the RRP in the UK. What you should do with the RRP from the US is add sales tax."
The second culprit Maquire identifies is exchange rate fluctuations, "When businesses trade, they hedge. It depends what currency you're buying against. We don't buy anything in dollars, so the dollar can go up and down. If it were $1.40 to the pound as it was a while ago, then the PS3 would be a bargain compared to the US; if it's anything more than that, the UK price appears to be comparatively expensive. But we're dealing with euros and yen - it's about the relationship between those currencies."
Third culprit on Maquire’s list - the hilariously extortionate cost of living in the UK, which means far higher staff, retail, transport and many other costs.
Maguire also pointed out that Sony has to hedge against currency fluctuations -“When we look at our overall situation at the end of the year, that’s when we’ll deem whether we have made a loss or not – and the skill is making sure that you’re neutral. My fundamental aim is to have the hardware out at the cheapest price, simply because I sell more if I do that…[However] You don't want to be in a situation where you're looking at a variable RRP: you have to have that fixed. So no matter what happened this year to the euro, even if it started going the wrong way, we would not put the price up. If that trend carries on in the other direction, then guess what: we will put the price down …. Of course, I would dearly love to have the PlayStation 3 RRP under £400, and at such time as we can afford to do so, we will."
Don't forget you can read the full interview right here.
Maguire gave us a surprisingly full and frank description of the factors that go into deciding the PS3’s local price, citing VAT, exchange-rate fluctuations and the generally higher cost of living in the UK as contributory factors.
Firstly, we posed the question that’s on many consumers lips: why is the PlayStation 3 £425 in the UK when it is the equivalent of £300 in the US and £250 in Japan?
First culprit: VAT. Maguire told us: "There's a compulsion within the media to look at everything as a snapshot, and do a calculation, normally based on just the RRP in somewhere like the US and just the RRP in the UK. What you should do with the RRP from the US is add sales tax."
The second culprit Maquire identifies is exchange rate fluctuations, "When businesses trade, they hedge. It depends what currency you're buying against. We don't buy anything in dollars, so the dollar can go up and down. If it were $1.40 to the pound as it was a while ago, then the PS3 would be a bargain compared to the US; if it's anything more than that, the UK price appears to be comparatively expensive. But we're dealing with euros and yen - it's about the relationship between those currencies."
Third culprit on Maquire’s list - the hilariously extortionate cost of living in the UK, which means far higher staff, retail, transport and many other costs.
Maguire also pointed out that Sony has to hedge against currency fluctuations -“When we look at our overall situation at the end of the year, that’s when we’ll deem whether we have made a loss or not – and the skill is making sure that you’re neutral. My fundamental aim is to have the hardware out at the cheapest price, simply because I sell more if I do that…[However] You don't want to be in a situation where you're looking at a variable RRP: you have to have that fixed. So no matter what happened this year to the euro, even if it started going the wrong way, we would not put the price up. If that trend carries on in the other direction, then guess what: we will put the price down …. Of course, I would dearly love to have the PlayStation 3 RRP under £400, and at such time as we can afford to do so, we will."
Don't forget you can read the full interview right here.
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Comments
Bitterman 1 Feb 2007 12:34
1/2
What absolute codshit.
VAT? That's 17.5%, not 50%.
Exchange rate? Uh, yeah... that's WHY we're moaning that we're being asked to pay 50% more, dufus.
Higher cost of living and transport? Well Europe is closer to where the manufacturing is done than the US is, and you're asking me to believe that landing a boat on the East coast of the USA and hauling it 2000 miles overland is in some way cheaper than landing a boat in the UK and transporting it just 200 miles to wherever it needs to be?
Come to that... how come other electronic goods are only about 5% more expensive (after tax) over here? What's magical about the PS3?
All absolute rubbish. We're being asked to pay 425 quid because Sony want to shaft us. This is just more lies... I'm still waiting for the March 2006 global launch, remember that? I mean, it's only a year late and not global at all.
VAT? That's 17.5%, not 50%.
Exchange rate? Uh, yeah... that's WHY we're moaning that we're being asked to pay 50% more, dufus.
Higher cost of living and transport? Well Europe is closer to where the manufacturing is done than the US is, and you're asking me to believe that landing a boat on the East coast of the USA and hauling it 2000 miles overland is in some way cheaper than landing a boat in the UK and transporting it just 200 miles to wherever it needs to be?
Come to that... how come other electronic goods are only about 5% more expensive (after tax) over here? What's magical about the PS3?
All absolute rubbish. We're being asked to pay 425 quid because Sony want to shaft us. This is just more lies... I'm still waiting for the March 2006 global launch, remember that? I mean, it's only a year late and not global at all.
tyrion 1 Feb 2007 13:43
2/2
Bitterman wrote:
Come to that... how come other electronic goods are only about 5% more expensive (after tax) over here? What's magical about the PS3?
Utter BS!
Try comparing console launch prices. The US quoted prices are exclusive of sales tax, so I've converted the UK launch prices to dollars then removed the 17.5% VAT. I've then divided the UK price by the US price to get a comparison.
Wii
US: $250
UK: £180 = $354.51 ($301.71 ex VAT)
Or 120.7%
XBox 360 Premium
US: $400
UK: £280 = $551.30 ($469.19 ex VAT)
Or 117.3%
PS3 60GB
US: $600
UK: £425 = $836.82 ($712.18 ex VAT)
Or 118.7%
So the Wii is the rip-off amongst the new consoles!
Then try other entertainment hardware, these prices are quoted on Amazon's or Apple's stores, so are directly comparable since that's what people will pay.
8GB Nano
US: $250
UK: £170 = $334.73
Or 133.9%
Samsung BD-P1000 Blu-ray Player
US: $900
UK: £600 = $1181.39
Or 131.3%
By those measures, consoles are more evenly priced than other electronic goods.
Doesn't stop £425 from being a lot of money, but it's a comparable amount.