Apple announced a new iPad on Tuesday — but it ain’t cheap for Brits.
The the 9.7-inch device, which will be available to order on March 24, starts at $329 in the US. But in the UK, it’s retailing for an eye-watering £339.
That’s unprecedented for Apple: The device’s numerical pricetag is actually higher in pounds than dollars, despite the historical weakness of the dollar against the pound. (The first iPad, for example, cost up to $829 in the US, and £699 in the UK.)
At today’s exchange rates, $329 amounts to around £264 — while £339 turns into $442. The higher-end model reaches numerical parity, with either £559 or $559 for a 128GB device with WiFi and cellular.
So what’s going on? Is Apple shamelessly gouging British customers? In a word: no.
The reason for the skyhigh UK prices is twofold: The weakness of the pound following Britain’s vote to leave the EU, and the strong “Trump dollar.”
Apple increased prices after the UK voted to leave the EU last year, sending the pound tumbling, to a point where numerically prices in pounds and dollars were almost equal. The new MacBook Pro sells for $1,499 in the US, and £1,449 in the UK, for example.
The strength of the dollar relative to the pound means that Apple has to put prices up, otherwise its old prices will eat into its profit margins — especially given just how strong the dollar is right now. “Foreign exchange is a bit of a problem for Apple and any US company that has any business overseas,” Apple CFO Luca Maestri told Bloomberg in February 2017. “The dollar is very strong.”
Back in November 2016, an Apple spokesperson gave Business Insider the following statement (emphasis ours):
“Apple suggests product prices internationally on the basis of several factors, including currency exchange rates, local import laws, business practices, taxes, and the cost of doing business. These factors vary from region to region and over time, such that international prices are not always comparable to US suggested retail prices.”
If you do the maths, you see that Apple is actually being pretty fair about its iPad prices. British prices include 20% for VAT, while American prices never do. (Instead, Americans pay sales tax, which is generally lower than British VAT and can be as low as 0%.) Subtract 20% from the £339 and you get £271. Convert that into dollars and you get $337.80 — which isn’t far off $329 at all.
So Apple isn’t trying to fleece Brits. It’s just watching out for its bottom line.
But that doesn’t change the fact that if you want the latest American gadgets in the UK right now, your wallet is going to take a pounding.