Why are mass manufactured products more expensive in the UK? (most replies here say tax but the math doesn't make sense)
Posted by trkb@reddit | AskUK | View on Reddit | 59 comments
Most things in the UK seem to be way more expensive than in North America or Asia, and I get that the VAT is 2x the VAT or sales tax rates of other countries, but I still don't get the math. I've read similar posts/replies online, and a lot of them point to tax, but the number doesn't make sense even after you take account for that difference.
A case: the same products, with tax adjustments:
For example, here's a fan (Honeywell HT900E or equivalently HT900).
UK price: 28 GBP
US price: 15 USD (for comparison let's apply, 20% tax. then, 13.38 GBP)
Japan price: 4500 JPY (since they also have 10% VAT, with 20% adjustment, 4500*0.9*1.2 =4,860 = 22.68 GBP)
Korea price: 32000 KRW (again since they have 10% VAT, 20% adjustment, 32000*0.9*1.2 =34,560 = 17.04 GBP)
Possible causes:
So even after taking accounting for the tax difference, the price in the UK seems to be pretty high. And this goes to almost every type of items, both no brands (everyday consumables, private label products) and big brand items (Apple, Tesla, Samsung, etc.).
My guesses are:
-
additional taxes I'm not aware of (import tax? though I thought most countries would intentionally lower import taxes via FTA and other methods)
-
regulation: perhaps there're additional tests or verifications or paperwork required
-
logistics cost (energy is expensive or logistics is inefficient; though both Japan and Korea import energy abroad almost entirely)
-
low resistance to price increases (e.g. monopolized market/supplier)
Sad_Cardiologist5388@reddit
Are you ignoring blatant price gouging? Charge as much as possible in any given market. Its not a crime in the UK
vishbar@reddit
Lol.
Pricing should be a crime.
Reddit Bureau of Economics, ladies and gentlemen.
cwright017@reddit
You’re conflating market pricing with price.
The latter basically means inflating prices when severe market pressures apply ( eg hiking up the price of masks during covid when consumers have no other option. ), it’s not really the same as a company trying to make a fair profit.
heroics-delta8s@reddit
You are entirely free to set yourself up importing goods to sell them less.
rising_then_falling@reddit
It's not a crime anywhere and is the fundamental basis of how markets work ever since farmer Giles was first allowed to sell his bushels of rye in the market square instead of just handing it over to his local manor Lord.
QuickTemperature7014@reddit
The Honeywell HT900E has ranged in price on Amazon from £21.14 to £28.99 or £17.62 net / $23.71
The Honeywell HT900 is listed on the Honeywell store as usually selling at $27.95. It is currenly available at Wallmart for $14.99.
So part of this seems to be down to you choosing the higher end pricing for the UK and the lower end pricing for the US.
trkb@reddit (OP)
I think your comment is quite misleading. So what I did is I tried to find the lowest price possible for each country from a major retailer. Ok so even with the lowest price historically, 21.14 gbp in the UK vs 13.38 gbp in the states (15 * 20% tax to match the higher UK rate)
QuickTemperature7014@reddit
I'm sorry what? I'm misleading people by showing them a wider range of entirely factual prices than the ones you cherrypicked to include in your post?
You didn't state your methodology for selecting the prices in your post but it's helpful to know it now. It is flawed. A single product at single point in time from a single retailor is far too narrow a selection to support a conclusion as broad as the one you have.
You’ve also selected three American brands and asked why they are cheaper in America. So, there’s a problem with selection bias in your approach too.
What would you say if someone were to find just three European products that were currently more expensive in the US than the UK (and with tariffs being what they are that shouldn’t be too difficult)?
Odd-Werewolf4578@reddit
The best comparison is with apple products.
I just looked at the iPhone 17 pro they are priced at $1099 and £1099. So OP statement is in fact true
Jimquill@reddit
Im in SEA and my guess as to why stuff is cheaper:
People have a lot less money, so if they don't price it cheap, it doesnt sell.
The factory is right there in China. Transporting it to here takes no time at all. Allowing lower costs.
This is the same reason why vegetables are so cheap in UK compared to here. Low travel distance.
trkb@reddit (OP)
I thought about that as well, but research reveals that bulk container shipping is actually pretty cheap. Obviously it costs much more than shipping within Asia, but shouldn't result in 15-30% difference. Also Korea and Japan are relatively developed and high-income
palpatineforever@reddit
There are two parts,
cost is part of it, includeing tax, which includes business rates.
Also the transport costs, includeing petrol and storage costs.
Then add on things like employment costs, and insurances etc.
So overall the costs can increase quite a bit.
Korea has a minmum age of £5 equivilent of, so while there might be some high income they wont all be and employment for delivery etc might be quite a bit cheaper.
Demand also plays a part what will the market bare in terms of cost for an item.
trkb@reddit (OP)
Ok, further going down on this research project, out of curiosity, I just looked up and an average package delivery job in Korea pays about roughly 30k gbp/yr (60 million krw/yr), and more experienced ones making more. And people mention that the minimum wage is higher than the states, but parcel delivery drivers usually make way above both the federal and state minimum wage. So I think the impact of labor cost might not be important.
Fuel cost, employment tax, and other costs however seem quite more expensive here.
Purple-Anywhere3963@reddit
Japan isnt high income though, avg is $1000 per month
TimeTimeClock@reddit
Anecdotally, Kmart in NZ has cheaper items than I can find in the UK. Most of the stuff is made in China.
TimeTimeClock@reddit
How about minimum wage?
trkb@reddit (OP)
I see lots of comments about wages mentioning that the federal minimum wage is much lower than the UK one, but in the states experienced delivery drivers (e.g. ups drivers, amazon drivers) often get paid 20-30 usd/hr. A skilled UPS, Fedex, etc. deliveryman can make 100-150k/yr usd. Even the driver I knew from a small town (low cost of living area in a lower GDP state) made close to what's equivalent of today's 100k. So I guess if the labor cost matters, it's more about labor productivity, payroll tax, and logistics inefficiency, not the wage itself.
Whoisthehypocrite@reddit
We are always assured that the minimum has nothing to do with the price of goods.
PepsiMaxSumo@reddit
Typically pretty little - wages are usually around 20p of a price of a pint.
heroics-delta8s@reddit
20% are employment costs not 20p and probably closer to 30%. They'll be outliers like Wetherspoons that operate a different business model to most places that sell alcohol.
towerridge@reddit
Californias minimum wage is the same as the UK
mousey76397@reddit
But isn't California the exception rather than the rule.
saxbophone@reddit
We call it "maths" over here FYI, "math" isn't used.
ukbot-nicolabot@reddit
A top level comment (one that is not a reply) should be a good faith and genuine attempt to answer the question
trkb@reddit (OP)
Thank you! I'm trying to learn the British English, so it's always helpful to get pointed out.
saxbophone@reddit
No problem, glad it's appreciated. I thought I'd point it out because I know a lot of foreigners do appreciate polite corrections like these.
Groovy66@reddit
We are a captive audience and they have us over a barrel. We have to like it or lump it.
Ethtr8der@reddit
manufacturers charging what they can get away with in a smaller, captive market + retail costs in a dense, expensive country + the entire distribution chain having narrower volume to spread fixed costs over. Tax accounts for maybe 5–8 percentage points of the gap. The rest is structural and, frankly, partly just companies exploiting limited cross-border competition.
heroics-delta8s@reddit
I'll trim that for you:
"manufacturers (and retail sellers) charging what they can get away with"
It's the very essence of a market economy.
spaceshipcommander@reddit
You're missing the key factor in pricing pretty much anything. You price at what the market will stand.
wongl888@reddit
I use to work for a UK importer of Chinese goods. One of the reasons why UK prices are higher than say in the USA (for the same product) is of course the volume. US companies typically buy 20 times what Uk companies buy. Besides the volume discounts, the UK (and some European countries) also have the unusual “sell or return” clause in their contract. This means that if the buyer is unable to sell the product, they can return it to the importer for a full credit. Whereas in the US the buyer will have to drop the price (which they often do to sell off the remaining stock when a new model is introduced). Therefore Uk importers have to factor in the cost of crediting unsold products in their prices to arrive at a higher price.
trkb@reddit (OP)
Thanks! Wow interesting to find out about the existence of “sell or return” clause
BillyJoeDubuluw@reddit
Respectfully - “You still don’t get the Math because you still don’t get the Maths” …
The UK is inherently overpriced and this is just one example.
trkb@reddit (OP)
Thanks! Diligently learning the spelling differences, so it's great when people point things out to me.
BillyJoeDubuluw@reddit
It wasn’t snobbery of spelling differences, it was intended as a point with a little bit of a pun but has gone right over your head, sorry mate…
You’re familiar with the Math (and economics) of the US and not the UK…
It was intended to be light hearted and a bit of a joke… Never mind ✌🏽
PepsiMaxSumo@reddit
You’re using some flawed logic here, you need to use RRP prices as that’s what the manufacturer sets and removes local discounts, bulk buy discounts, overstock clearances etc.
So for 1. That fan RRP in the US is $27.95, in the UK it is £29.99, in Japan it is $30 (usd), can’t find a korean source other than this post.
Car pricing is a bit random and it is the reason for the 25 year import law in the US. At least we’re not in Ireland with their double tax rates on new cars.
MacBook Air - £1099 in the UK = £879 pre tax, for the US $1099 is £816 pre tax which isn’t a major difference especially when you consider the volatility of the dollar in recent years.
trkb@reddit (OP)
For the fan, I just tried to find the cheapest legit options from major retailers in respective countries, not the manufacturer price. Same story for the laptop. Not sure what it's like to buy a car here in t he UK, so I can't compare.
10-30% difference is definitely not negligible, but the currency devaluation explains it!
anal_fist_fight24@reddit
It’s a combination of willingness to pay, smaller markets in some cases, less retail competition. Look how Amazon has driven UK retailer pricing down - now imagine a Best Buy, Walmart, Home Depot etc all competing too.
Steamrolled777@reddit
Those companies tried in UK and failed. Best Buy (2012) Walmart(Asda 2021) BBQ is equivalent of Home Depot..
PitchOk1448@reddit
A lot of it is the tax, but it's not just the tax on the product. Employment is heavily taxed, rates are expensive, and so forth. Regulation does push up business costs, and employment laws are again a good example. The minimum wage is high, it's difficult to get rid of bad employees (or even just unnecessary employees), and it's easy for anyone who is disgruntled to make you bear a load of cost dealing with an employment tribunal claim. Consumer laws are also quite strong here which represent a cost on the seller side. They have to bake all of this into the price charged to the buyer.
So yeah, tax and regulation is a lot of it. The thing is if you put a load of tax and compliance costs on suppliers of any given kind of thing, the cost of that kind of thing increases for the end buyer. This seems not to be widely understood in the UK but it's pretty obvious if you think about it.
trkb@reddit (OP)
thanks! I completely neglected other taxes as you mentioned. thanks for explaining
Outrageous_Dread@reddit
Taking your HT900E
What your missing is your buying at peak price the average UK price on Amazon in the last year is more £21-22 so the extra £6 is more its hot they will pay.
All in your $14.99 or £11.80 v £22 has mostly been accounted for leaving £1 spare for risk that UK doesn't have hot summer and sales are low and having to sell at £20 to get some traction
trkb@reddit (OP)
I appreciate your break down! Thanks for taking the time to comment
Itchy-Ad4421@reddit
I’ve never noticed. All of the bigger ticket sort of items I’ve bought have cost more in the USA for example after sales tax etc.
Nintendo switch 2 / ps5 / motorcycles cost literally thousands more
asuka_rice@reddit
Competition is one of the answer and also cost like delivery to you or the guy wage paid to package the item up to sent it to you.
29407258729587348957@reddit
Stuff sells for what it can be sold for. That's it. There's nothing more to it. If you can sell it for £10, why sell it for £5? Makes no sense. Same for, say, Thailand. If they sell something available for the equivalent of £2 and say "hey, it's £10 in the UK - let's make that the price" then it won't sell because everyone else there is selling it for £2.
isaytruisms@reddit
I split my time between the US/UK and EU due to work travel, so I have the option to buy things in different countries.
There are definitely some products that are targeted at specific markets and can be significantly more expensive in other markets, but generally the price comparison for e.g. consumer electronics between the US and UK is very similar. The only real difference is that if I buy it in the US I get effectively no consumer rights.
Tl;Dr some things are cheaper there, some things are cheaper here. Except groceries which are always more expensive in the US.
trkb@reddit (OP)
Yes, one interesting I've noticed is the produce being significantly cheaper here, despite a lot of them being imported
blenderwolf@reddit
Do you have a link to an example?
trkb@reddit (OP)
Yes for the specific example (the fan) I mentioned (almost 2x difference):
- https://www.amazon.co.uk/Honeywell-HT900E1-HT900E-Turbo-Fan/dp/B001VEJFT6/
- https://www.amazon.com/dp/B001R1RXUG
Apple iPhone 17 (12% more expensive even after bumping US tax rate to 20%):
- https://www.apple.com/iphone-17/
- https://www.apple.com/uk/iphone-17/
yuzusnail@reddit
I've found this a lot too, including digital goods like games on steam, so sometimes I ask a friend elsewhere to buy it and I pay them back ToT so annoying
Also with the recent discussion of Switch 2 prices going up made me realise that the US was getting it a chunk cheaper, their new price is still seemed cheaper than our current one but I didn't check tax.
trkb@reddit (OP)
Oh yes, I forgot about the digital goods as well. The price difference is often lower, but sometimes questionably higher.
rising_then_falling@reddit
Some are some aren't. You have to consider the significant cost of UK distribution and retailing.
Once the containers holding a thousand of those fans hit Felixstowe, they start being handled by UK companies paying UK wages/taxes and paying UK energy costs. Warehouses built on extremely expensive land to an extremely high standard, paying our high minimum wages. Lorries paying UK diesel prices and passing our emissions and MOT standards, retailers adhering to our consumer laws and paying UK rents and energy costs.
HW90@reddit
Japan and Korea are lower income countries and closer to the source, which decreases the price.
The US has a low minimum wage compared to the UK which would reduce the price, but also logistics due to its population. A lot of companies also offer lower prices in the US to fight against competition, sometimes subsidised by prices in other countries.
There might also be a regulation factor. Fans sold in the EU are supposed to last for 10+ years, while from search results a lot of HT900 users are reporting that they last about 3 years, so it could be that is a cause of the price difference.
Legitimate_War_397@reddit
Have you factored in different climates? Case in point I saw people buying fans, parasols etc during the bank holiday weekend that were significantly more in price than what I paid for in the winter. Supply and demand after all.
trkb@reddit (OP)
Yes.. So fan is just an example because I happened to be looking for one haha, but it gets pretty hot and humid in east asia and in parts of the states/canada. You can find the same case for pretty much anything, ranging from kitchenwares and papers to appliances and cars.
nithanielgarro@reddit
Often these things are priced at what the market can achieve rather than what they cost.
Retailers want profit. Distributors want profit Resellers want profit
There's a principle of economics that covers this called Price Elasticity if Demand. (Also PE of supply)
To take your honey well fan example, in those markets there are also competitors supplying significantly cheaper fans. Less uk manufacturers of fans as the price to manufacture in uk is significantly more expensive than USA which has virtually no labour laws
dDtaK@reddit
Import tariffs etc are a thing for some products and the cost of doing business in Europe is just higher (did you think those employee protections and two year warranties come for free)? Fundamentally you’re comparing different economies and we don’t have a global single market.
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