New Amazon Kindles and Pricing

So Amazon, as widely expected, has announced details of its new range of Kindles. There are four of them:
Kindle at $79
Kindle Touch (WiFi) at $99
Kindle Touch (WiFi + 3G) at $149
Kindle Fire (their colour tablet) at $199
Woohoo. Let me order one immediately.
Ah. But they’re mostly only available in the US. I know it’s annoying, but clearly these things are priced to go, and Amazon is going to sell bucket loads. Until they can ramp up production, they clearly want to satisfy the US market. A regional rollout of products is pretty standard. Only Apple seems to manage anything more to an extent – and even they struggle.
So we’re just getting the new version of the Kindle.
So let’s see – if I go to Google and run a currency conversion that comes out at… £50.47.
Ah. But I’ve forgotten import and sales taxes like VAT (20%). That makes it more like £60.56 (with VAT anyway).
But that’s probably still hopeful.
So I looked at the previous range of Kindles and compared the Amazon prices on the .com website in the US with the .co.uk prices which include taxes like VAT. The $139 device cost £111, and the $189 device cost £152. Note that I didn’t use their ad-supported version of the Kindle for this comparison – I compared like with like products. That equates $1 to about 80p*.
So if we multiply $79 x £0.80 and round up a bit we get £64. OK. Let’s give Amazon a little flexibilty. Apple always likes to point out that currencies fluxuate, and they have to allow for this. So £69 would be about right? That’s still a significant saving on £111.
But in fact Amazon is charging £89. The difference seems to be the “with offers” (i.e. ad-supported) nature of the US model. That seems to be worth £20 over the life of the device. Amazon’s ad sales team must be doing well.
The original Kindle “with offers” retailed at $99 while without, it retailed for $139. That’s a 40% price “hike” for the ad-free version.
My original £64 calculation + 40% = ….
£89.60.
So in fact, Amazon is spot on. They charge a 40% premium for an ad-free version, and a direct price basis, we’re getting it for precisely that price. It looks as though the basic $79 Kindle in the US simply won’t be available without ad support is one option. You can also buy a $109 version without special offers. That’s a 38% premium – very nearly the 40% premium I’ve been talking about.
I’m still a bit disappointed. And I’d particularly like to see Amazon give it’s UK Prime members some of the offers its US subscribers are getting. Perhaps that’ll happen once Amazon roll out their Kindle Fire in the UK – something I can’t now see happening before Christmas.
As for me. Am I buying one?
Not yet. The new model is £22 cheaper than the previous one. But it’s still psychologically the thick end of £100.
E&OE. Do let me know if you spot a flaw in my calculations.
[Update] I’ve corrected the availability of a “without special offers” version of the basic Kindle. It’s also worth noting that the Kindle Touch prices listed above are also the cheaper “with special offers” versions.
It is also worth mentioning as James correctly highlights in comments that if you buy a device in person in the US, you will have to pay the prevailing State sales tax. However, somewhat unfairly, most States don’t seem to force e-commerce sites like Amazon to charge that tax, giving those retailers an even bigger advantage over bricks and mortar stores.
So in this instance I can buy the same machine for £89 inclusive of all taxes that a US citizen in most States will pay $79 for.
* By way of comparison I ran the process on US and UK Apple Store iPad pricing and came to an average of $1 equating to… 80p.
I was quite surprised by this finding, having previously come to the conclusion that Apple gouged its UK customers to a much greater extent than other companies. So I ran the same process on MacBook Airs, across the four basic offering, and I came to $1 = 84p finding. In other words, iPad pricing is better than MacBook Air. Of course that might be down to issues like duty. I’d look up the relevant duty for laptops, but it seems that information is only available on subscription. That can’t be right can it?
[Update] This website informs me that to import a laptop to the UK incurs an import duty of 0%. However it’s worth noting that VAT is chargeable on shipping and any insurance. So there are additional costs involved in importing devices into the UK.

2 Comments

  1. Last year, I was planning to go to Chicago. I wondered whether it would be possible to buy a MacBook Air out there, rather than here, since it would be miles cheaper, wouldn’t it? Miles cheaper.
    Except. As a business purchase, I get the 20% VAT back. And the much lower price in the US didn’t include sales tax – which you don’t get back as a non-US citizen. After doing those calculations, I think from memory the MacBook Air was £6 more expensive in the UK – but then, I like my pound sign on my keyboard.
    It’s never quite as simple as it looks…

  2. You’re absolutely right. Of course if you ordered your MacBook online from Amazon, you could have avoided those taxes in many states. This is further complicated by the physical locations of Amazon’s warehouses and fulfilment centres.
    And with purchases like laptops you have to ensure that the warranty is international and so on.

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