# Why are prices in EUR for consumer items often the same number as original USD price, but the GBP price applies the actual exchange rate?

Since my store started accepting EUR payments in 2002 I often see the numerically same EUR price as the original USD price.

Many international suppliers, stores, e-shops offer the same items in US and Europe. Price tags are exactly the same, but currencies are different.

For instance, an item sells for $59.99USD in the US but it will be at €59.99EUR in EU. But in the UK the price will always apply the actual exchange-rate, say (59.99/1.6)=£37.49GBP. This usually happens with international stores located and registered independently in the US, UK and EU. So, why$59.99USD = €59.99EUR for EU, but £37.49GBP corresponding to the exchange rate in the UK?!

This usually doesn't work with on-demand currency conversion option where available on websites, because the actual billing currency is the only one based on actual e-shop location (UK:GBP, US:USD). The currency conversion looks just as a helper option in this case, these are not real billing prices.

• Welcome to Money.Stackexchange.com sublay. Can you provide an example of what you're referring to? Jan 5, 2013 at 19:30
• An example would be the Macbook Air, selling at $999 and at EUR 1049. While here the prices aren't exactly the same, EUR 1049 is clearly much more than USD 999. My short answer to the question would be: Because they can. Jan 5, 2013 at 23:10 ## 3 Answers The simplest answer would be: Because they can. Why charge less for something if people will pay more? One example are Apple products. While there the price number is not exactly the same in EUR and USD, they are so close that, effectively, the EUR product is more expensive. Many things go into a price. There might be reasons for products in the EU being more expensive to produce or distribute. Or people in the EU might be in general more willing to pay more for a certain product. In that case, a company would forgo profits when they offered it cheaper. Also, prices are relative. Is the USD price the "correct" one and the exchange rate should dictate what the EUR price is? Or vice versa? • Seems you are right. There is no efficient explanation at all. For me in Russia USD seems to be always correct, because it is more worldwide than EUR (Asia, Brazil, etc) and is almost always lower than EUR including shipping :) Jan 6, 2013 at 20:35 It's mostly VAT (value added tax or sales tax). For example an US IPad is$499 without tax, and a German IPad is EUR 499 including 17% VAT. The base price is actually only EUR 417.

In addition to that, cost of business is a little higher in Europe because of tax structures and because smaller countries cause higher overheads.

• Thank you! Quite interesting point of view. And it explains only local store price lists, not worldwide trading via internet. Jan 6, 2013 at 20:38
• @sublay it explains also trading via internet between EU countries. An UK online retailer selling online to a spanish customer has to charge the VAT and also include it in the displayed price; also all Apple (and other) advertising in EU is required to show the tax-included price - advertising 417 EUR if the actual price w. tax is 499 EUR would be treated as fraud. Only importing directly from USA/China/whatever would be different, but that lands you with customs issues and getting charged the same taxes there. Nov 5, 2014 at 15:16
• In addition, there are stronger consumer rights in the EU, where a seller might have to do repairs or replacements for free where a US customer would have to pay themselves. Obviously that affects the price. Nov 6, 2014 at 22:24
• @84RR1573R If you buy a MacBook over the Internet from the US, you have to pay VAT when it's delivered to you in Europe. Sep 19, 2018 at 10:03

In the EU prices on consumer-focussed sites* are quoted inclusive of VAT. In the USA prices are quoted exclusive of sales tax.

Consumer pricing is usually driven at least partly by psychological concerns. Some pricepoints are more appealing to certain types of buyers than others.

The Euro vs dollar exchange rate has fluctuated a bit over the years but it's generally averaged somewhere around 1.2 dollars per Euro over the last decade. VAT has varied around 15%-20% in most cases.

Put these things together and the same headline price points are generally appropriate in both the USA and the Eurozone.

OTOH the Brisith pound has been worth substantially more than the dollar or the Euro. So it makes sense to have a lower headline price in the UK.

* B2B focussed sites often quote prices exclusive of VAT, you need to be aware of this when comparing prices.