Pricing isn't about fairness, it's about maximising surplus for the seller. Businesses aren't a public service, they're in it to make money.
Valve will have pricing analysts that have studied the demand curve and concluded the higher price point may reduce demand but is nonetheless the point where marginal revenue from that geographical segment approaches some notion of marginal cost, thus maximising returns. With such a varied range of content and the ability to vary pricing dynamically through specials and discounts and bundles, they'll have collected a wealth of data about game price elasticity in different market segments.
As anyone who's studied economics 101 would say, it's all about willingness-to-pay and how that translates into price elasticity.
In a similar vein, it is 80% more expensive to prebook an Avis rental car at Melbourne airport (MEL) if you declare US residence vs EU residence. Yes, really, 80% more, try it.
This is explained by expectation, which translates directly into willingness-to-pay: US visitors are so used to renting a car that they don't explore the alternatives. European visitors on the other hand are astounded that there is no rail link into the city, and renting a car is at the bottom of the alternatives list.
In the game distribution world, it's likely that the US has more volume, more alternatives and more domestic competition, hence greater price elasticity, hence more aggressive pricing. Steam has strong differentiation and provides global access to products not otherwise marketed outside the US, and Valve are typical of a leading oligopolist, exploiting this position in their pricing strategy.
I guess it just frustrates me because I can't get around it.
With physical goods, if I don't like the AU price, I can easily shop online on another countries website and get the goods shipped. No problems.
With digital goods, there's mostly no way to legitimately purchase them from overseas. You can use a VPN and a fake address, but that breaks the terms & conditions.
Advertised prices in $ exclude sales tax, because for most states it isn't levied on digital downloads.
However, VAT in EU countries (don't know about Australia) is included in the price. This causes a fairly substantial discrepancy, as VAT can be rather high (in the UK, 20%). Other discrepancies can usually be put down to exchange rate fluctuations, which with the recent financial issues in Europe have been somewhat unstable.
Regarding Australia, our GST is a flat 10%, and the AUD is near parity with the USD (and has been above parity for most of the last 12 months). The price discrepancy is far greater than it should be if those were the only factors.
The Australian Competition and Consumer Commission, an independant regulatory body in Australia that oversees the Trade Practices Act (among other things), is in the process of inquiring into the so-called "Australia Tax" to find out why companies like Apple and Valve charge far more for software sold in Australia than in other countries despite the low true cost difference.
The ACCC is pissing in the wind. It's just a matter of geographic price segmentation to maximise revenue. End of story.
Also, end of legal challenge:
* there's no violation of free trade agreements, which are about governments dropping barriers like tariffs and quotas and confer neither rights to individuals nor obligations on businesses, and
* there's no violation of individual rights, because country-of-residence is not a protected class, unlike gender/orientation/skin colour/race/disability.
Valve will have pricing analysts that have studied the demand curve and concluded the higher price point may reduce demand but is nonetheless the point where marginal revenue from that geographical segment approaches some notion of marginal cost, thus maximising returns. With such a varied range of content and the ability to vary pricing dynamically through specials and discounts and bundles, they'll have collected a wealth of data about game price elasticity in different market segments.
As anyone who's studied economics 101 would say, it's all about willingness-to-pay and how that translates into price elasticity.
In a similar vein, it is 80% more expensive to prebook an Avis rental car at Melbourne airport (MEL) if you declare US residence vs EU residence. Yes, really, 80% more, try it.
This is explained by expectation, which translates directly into willingness-to-pay: US visitors are so used to renting a car that they don't explore the alternatives. European visitors on the other hand are astounded that there is no rail link into the city, and renting a car is at the bottom of the alternatives list.
In the game distribution world, it's likely that the US has more volume, more alternatives and more domestic competition, hence greater price elasticity, hence more aggressive pricing. Steam has strong differentiation and provides global access to products not otherwise marketed outside the US, and Valve are typical of a leading oligopolist, exploiting this position in their pricing strategy.