As someone working in technology and living in Australia yet with a high degree of involvement with tech companies in the USA, I’m reminded of the massive cost differences every day between the two countries for geeks like me. So Peter Martin‘s article Soft Touches Pay the Price in today’s Age/Sydney Morning Herald simply just rubs even further a sore nerve with me.
Peter explains how companies use price discrimination to maximise profits. For example, supermarkets that manipulate the merchandising of vegetables to ensure the well-heeled pay a little more.
Price discrimination has been alive and well in technology and online, and as the technology improves, so does the discrimination become more pronounced. Amazon can display different prices for the same book depending not only on where you live, but your past purchase history. Regular buyers are charged more than new customers, presumably operating on the presumption that you’ve become comfortable with the idea of online buying and don’t require additional encouragement.
Terry Lane covered the technology price differences between Australia and the USA more than a year ago in his article Software prices defy comparison across borders. He offered up several examples of software that Australians pay more for than US residents. I know this pain first hand. Here are a couple of examples I checked today for software I use every day to earn my income:
Microsoft Visual Studio (it’s a key tool in a software developer’s armory): In the Microsoft US online store it costs $US499. In their Australian store the price is $A724. Given our exchange rate is almost at parity, and to keep the math simple, that’s a 45% premium – for exactly the same product, probably downloaded to my computer from the same Microsoft server.
Adobe Creative Suite monthly subscription: costs $US49.99 in the USA and $A62.99 to mugs like me in Australia. Not quite as eye-watering a difference as Microsoft but still a 26% premium.
What is particularly irksome about Microsoft is they deliberately penalise people ‘in the trade’, technology workers like me. Purchasers of consumer products such as the Windows operating system, and the Office suite, appear to pay the same – I compared prices and the $US and $A price tags were the same.
The cost of doing business as an Australian technologist is not confined solely to the software we use of course. Another key expense (for those of us working from home or our own small business office) is internet access. Whenever I chat with US tech friends about the cost of internet and telecommunications in Australia the conversation usually ends with them rolling around on the floor laughing silly. Because Australians pay through the nose for internet access.
I just checked the Comcast web site in the USA, one of the mainstream internet, phone and cable TV providers. I can buy a 30Mbs (=pretty darn fast) cable internet connection, plus a big bundle of TV channels, for $US49.95. Here in Melbourne, I’m paying Telstra $99 a month for my ADSL connection, and another $100 a month for my cable TV. Oh, and Telstra caps my downloads to 200Gb a month – Comcast does not appear to have any restriction. Americans historically, I believe, have not had ‘caps’ or usage limits on internet and phone plans, so again my US colleagues convulse when I explain how my son or daughter has racked up a big ‘over cap’ bill for exceeding their data allowance for the month.
All of this presumably feeds into the serious cost of living differences between the USA and Australia. I found this Cost of Living Comparison Between United States and Australia, and I compared Melbourne and San Francisco, which shows an astounding cost differential. For example, basic utilities (Electricity, Gas, Water, Garbage) are 90% more expensive in Melborne.
This is the last time I’m paying any attention to my geek friends in San Francisco moaning about how it’s such an expensive city. Because if they feel ripped off they ain’t tried paying the price of being a self-employed technology worker in Australia.
Image from Flickr artist in doing nothing
David Eedle 
Does seen unfair, but at the same time is there no way to “cheat” the system? Use a proxy to access the software stores you buy from? As for cable I pay roughly $60 USD a month for Comcast after their brief honeymoon pricing period. Although Comcast does not claim a cap on data, they have been known to throttle their power users, and send letters informing the users to take it easy. Sounds bad out there, but it’s not all sunshine and roses out here either.
Hi Travis, absolutely you can game the system. There are online services in the USA that will act as a local purchase and shipping point – they’re popular with people buying all manner of products online including clothes and shoes. For example, there are some clothing brands that won’t ship to Australia from their online store because they’ve done a protectionist deal with the local Australian distributor – who then charges a big mark up. One of the big impediments is the online stores can check your country via your credit card number – so because I have an Australian credit card they can block me using it via an online store in the USA.
With regard to the telcos, yes I appreciate that there are some good honeymoon deals – but even once the price goes up to the regular cost, it’s still a big difference. And the data caps kill us. Most mobile phone data plans only give you a 1Gb a month or so, then they charge like a wounded bull. My son was 200Mb over his 1.5Gb cap on his iPhone the other month, the extra charge was something like $A120.
When are you moving to SF? Haha!
Sure, cut me a check for the 3 kids, the house etc 🙂
David, I may be almost 3 months late on this post, but i’m really quite surprised about the SF vs Melbourne cost of living. You’re totally right – all of that whinging and complaining from people in SF lead me to believe it was *insanely* expensive to live there. But now… packing my bags as I type this 😉