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Keeping it honest with pricing is a global issue

  • By its very nature this website is no more Australian than the fish that swim this island’s surrounding waters. Some fish are local, others are interlopers. Visitors click to Digital Audio Review from all over the world. A website insists on a global audience. However, living down under gives light to issues that might not prevail elsewhere. This is why you’ll see the occasional lean towards Australian flavours.

    There’s no such thing as a bad product, only a bad price. It’s a motto for every marketing department to live (or die) by. Price is objective whilst value for money is subjective. The latter is a perception unique to each individual upon which the largest influencing factor must be annual income. Those earning $50k per annum aren’t as likely to see value in $30k floorstanders as someone earning thrice that.

    Wonder why so many young folk are into headphones? It’s not necessarily down to the innate qualities of private listening. It’s because those same young folk don’t have the incomes of older audiophiles (and nor do they have the living spaces to accommodate Boulder monos and Wilson loudspeakers). Over simplifying for the sake of argument: head-fi attracts a younger demographic because the kids, they can afford the gear. $200 is a lot of money to your average 23-yr old. To them, dropping $20k on loudspeakers is insanity.


    At the risk of stating the obvious: price affects all consumers. It’s the number one consideration for most. In Australia, it’s the local pricing of imported product that adds another hot potato to the mix. A prospective buyer will hit up Google in the hope of finding out if Australian (local) pricing is on par with that of the country of origin?

    A simple piece of mental maths:

    Overseas RRP + shipping costs + exchange rate fees + wire transfer fee + import duty + GST < local RRP?

    Or will buying local run you considerably more than the cost of conducting your own import? What is ‘considerably more’? 10%? 20%? 30%?

    Such questioning often spills onto web forums where users will share ways in which to land goods from country of origin, often using mail re-direction services (or similar) to circumvent domestic channels. Some consumers are happy to surrender local warranties if the cash saving is big enough. In a world of near-perfect information flow (the Internet), it’s human nature to prioritise price above more amorphous concepts such as dealer advice and warranty claim handling.


    Audiohiles down under are exhorted to buy local to support the local industry, echoing the ‘Buy British’ campaign of the late 70s. However, distributors with dealer networks that push the limits of consumer empathy probably won’t survive too long. The Internet sees Adam Smith’s invisible hand hard at work in slowly eroding large pricing disparities.

    That’s not to say that Australian distributors and/or high street retailers are taking the customer for a ride. Larger distributors must factor in operational costs of office hire, stock warehousing, staffing, running a dealer network as well as providing margins to those high street retailers who also have operational costs of their own; that’s a whole heap of something that smaller, home-based players who sell direct to the public don’t have to consider.

    Price gouging may well be taking place. Armchair audiophiles would have you believe that it’s rife. But is it? Without the public detailing of a distributor’s accounts their outrage is merely conjecture. Put another way: the armchair aimer can’t hit a target without proof.

    One factor that often gets lost amidst all the wailing and gnashing of teeth is the manufacturer himself. He has a significant impact on his overseas prices – something that’s invisible to the end user. Larger margins handed down from manufacturer to overseas distributor makes it easier for the local guy to (partially) absorb exchange rates fees, import duties and shipping costs – expenses that would otherwise be passed on to the consumer in local pricing.


    An example of this in positive motion is the NAD M51. Better margins from Lenbrook HQ in Canada allowed local distributor Qualifi to sell this DAC in Australia for AU$1499 – at today’s exchange rates, that’s around US$1400 and US$600 cheaper than the stateside sticker. Even at its 2013-revised RRP of AU$1999 Australia is still the cheapest place in the world for a brand new M51. You can still snag one for the old RRP from the most basic of Google searches.

    In the UK this same NAD M51 DAC sells for £1500. That’s pushing US$2600 (at time of publication).

    A similar disparity plays out when considering the Astell&Kern AK100 DAP. In the USA it’s stickered at US$699 but sales tax will see Americans handing over up to US$761 at the checkout. In Australia it’s even cheaper at AU$647 (US$612). The poor Brits are forced to stump up £569, the equivalent of US$977.

    Let’s look at something larger: the Peachtree Nova125 integrated amplifier. USA price = US$1599, Australian price AU$1999 (US$1892), UK price £1299 (US2200).

    It was the Oppo PM-1 headphones (reviewed by Srajan Ebaen) that initially put me onto this US vs UK vs AU train of thought. North Americans can grab a pair from the Oppo web store for US$1099.  However, those poor Brits have to pay the same. In Pounds. £1099 is equivalent to US$1900. Down under they strike the upper-middle ground at AU$1699 (US$1600).


    Lastly – take a look around at the pricing of the (rather wonderful) Sony NWZ-ZX1 DAP. The cheapest Japanese price is Y62,980. That’s equivalent to AU$659. Sony Australia are selling it for AU$699. Little cause for complaint there. Sony UK are selling it for £549…or AU$1000!  Ouch.

    Pricing deltas like these might set pulses the UK. Consumer VAT there currently runs at 20% – that’s double that of Oz’s 10% GST. Little wonder Australia’s term of endearment for the Brits is ‘wingeing poms’. The point? Australia isn’t the only country to sometimes allegedly cop the raw prawn on retail pricing, the blame for which can’t solely be laid at the local importer’s door.

    With a more generous margin at point of manufacturer wholesale the local distributor can absorb some of the import costs and pass the savings onto the consumer, which as I’ve shown above can and does lead to pricing that’s lower in Australia than overseas. ‘Strayaaaaa.

    Let us know what you think in the comments section below.

    Further information:  Australian import duty and GST | UK consumer VAT

    John Darko

    Written by John Darko

    John currently lives in Berlin where creates videos and podcasts and pens written pieces for Darko.Audio. He has also contributed to 6moons, TONEAudio, AudioStream and Stereophile.

    Darko.Audio is a member of EISA.

    Follow John on YouTube or Instagram


    1. My experience in Australia – albeit a short one of just a couple of years, and that was almost a decade ago – prices of a lot of things were quite high, far exceeding what exchange rates and local taxation suggested. Anyone based in Oz who has purchased software licenses for stuff from Corel or Adobe will know what I’m talking about. Daylight robbery, I tell ya!! Heck, I think even OZ iTunes (particularly movies and books) pricing is somewhat high compared to US and UK prices, though Apple have taken some steps to remedy the difference in recent years.

      As far as electronics are concerned, yes, I too noticed most of the Japanese products’ OZ prices (at least those by the giant corps, niche esoteric brands were another story) being quite competitive compared to the Continental or American brands. I think there is (or was) some special trade law between Australia and Japan, China and ASEAN member countries at the time, though don’t quote me on that please.

      FWIW, Japanese local prices for electronics aren’t exactly cheap either, also due to local duties and whatnot. You can usually get a JDM device for about 10 – 15% less in Hong Kong or Singapore.

      Also had similar (mostly worse) experiences in the UK. Dealerships there seemed to just take the US MSRP and replace the dollar with a pound sign. Crazy sh*t!!

      With regards to niche, luxury or specialist equipment (most sectors), I often suspect local distributors in countries/regions having a “cartel” amongst themselves, dictating and fixing prices as they see fit, simply due to the niche nature of the products sold. I mean, what difference does $10K here and there make to a Silicon Valley exec – why do you think most of the $100K+ loudspeaker showrooms are situated in that part of the US?

    2. I work for a company that imports/integrates/supports technical equipment and deal with this topic everyday. A detail that is often ignored & misunderstood is exchange rates. Most people look-up exchange rates on various exchange rate websites (e.g. which today suggests a rate of 1USD = 0.93 AUD. However, no bank will ever give you that rate. Today Westpac is exchanging at 1USD = 0.89AUD, which is the rate that an importer might work with. Furthermore, an importer must hedge the rate due to fluctuations between when he orders and when he pays and when he sells the kit. So, today (04 July 2014), a more reasonable rate to calculate the “value” of something imported from the US might be 1USD = 0.84AUD. An importer gambles on the rate and somebody (i.e. the customer) must pay for that service….

      • That’s right. And apologies for lumping this into “exchange rate fees”.

    3. You quote products where the Australian price is quite favourable compared to the overseas price. You also do acknowledge that there are examples the other way. One example sold by one of your advertisers is the soon to be released Auralic Aries high level model which is quoted at almost 30% higher than the listed US retail price. That mark-up curbs my enthusiasm to purchase one. I had expected it to be more competitively priced. It may be to do with the price that the manufacturer sells at.

      • That’s right John, dealer margin IS a factor. And for what follows I’ll assume that US retailers and AU retailers have sufficient margin built into the RRP.

        The US price of the Aries is US$1599. That’s BEFORE US sales tax, so some Americans will likely pay up to 10% more.

        Moving to Australia…

        Assuming US$1=AU$0.89 and converting that US$1599 to Australian dollars gives us AU$1800 (give or take). Let’s assume shipping costs of $50 per unit, that takes us to AU$1850. But wait a minute – there are import duties and GST to pay. Adding 15% for those takes us to AU$2127, which is in sniffing distance of A2A’s retail price and certainly a loooong way from being ‘30% higher than the listed US retail price’.

        With exchange rates as they are, Australians should not expect a product’s US RRP to immediately translate to the same number of Aussie dollars.

        Perhaps you curbed your enthusiasm John before considering the above? 😉

        • Hi John, I think Auralic is based in Hong Kong, so I’d assume that the products are made there too. If so, why figure shipping costs into the AU price calculation but not the US price? Also, I believe customs duties (not GST) will apply to the imported value, not the retail price. Hm… and don’t US businesses pay duty when importing too? Having said all that, I would consider 30% difference on the raw numbers to be a very reasonable price.

          Your article didn’t mention the $1000 GST/customs threshold, which tends to tip the scale in favour of importing if the item’s value (plus shipping) is less than that.

          Another reason to import is simply availability. Sometimes it’s a lot easier to get something from overseas than it is locally. Sometimes you can’t even get the item you want locally – and then there are also items that are “factory direct” only. Another is that some AU businesses are, for reasons known only to themselves, cagy about listing prices online. They make it too much work to even do the price comparison.

          A reason to buy locally that you didn’t mention is auditioning. While there aren’t as many hifi stores as there used to be, they still exist. You linked to Len Wallis, for example, I auditioned my HD650s there before purchasing them.

          Thanks for the thought-provoking article.

    4. I am very happy you broached this subject. How current economic realities are effecting the hobby is a topic that I have tried to bring up on various forums.
      The industry is being split between wealthy older customers (also some young tech wealthy) and actual audiophiles who have more modest means. Some very modest as in the headphone amps you mentioned as well as very cheap T amps.
      Their really is very little “middle-class” audiophiles and the industry reflects that.For years,companies like Sony have pretty much abandoned 2-ch hi-end.
      This situation will remain until the reality changes.Many “newer” audiophiles like myself are more into vintage equipment as it is an affordable entry to quality sound.

    5. The Australian agent for Auralic is associated with the retailer as they have the same address. So it is reasonable to assume that the units are purchased from the US at a wholesale price which I do not know but the Australian retailer benefits from. Therefore it seems to me, that this is price that should be the starting price for your calculation and not the US retail price. I used this product as an example because it is something that interested me. I had expected a just under A$2,000 price for the Aries

      • Yes – A2A are both distributor and retailer for AURALiC.

        Previously I demonstrated their AUS RRP was pretty much on parity with the US price (once the importer’s associated costs are factored in). Are you now saying that not only should A2A sell for a price that’s on par with the US but they should sell for (effectively) lower than the US guys? If we start with the wholesale price then how does A2A make money? Aren’t they just moving boxes?

        The distributor buy price and its associated margin is *his* to do as he pleases with. The margin might be as low as 10%, as high as 50%. This isn’t pure profit. A2A have the costs of a retail presence to factor in and these are paid for out of this margin. If a dealer network is to be supported this margin drops again.

        But as you say, we just don’t know what the margin is and therefore it’s off the mark to assume that this, whatever it is, should be automatically passed on to the consumer.

        If you think that importing an Aries yourself will save you money then have at it. 🙂

    6. Another product that interested me is the PSAudio DS DAC which sells in the US for $5,999 and is listed in Australia for $6,696. That is the sort of margin that seems more reasonable to me. If you apply your calculation to the US price for this product it would be much higher than the Australian list price. Hence my expectation regarding the price of the Aries.

      • Right ok. Assuming $150 for shipping from US to Oz, parity pricing for the PS Audio Direct Stream DAC in Australia *would* be close to AU$7900 – as you say, much higher the AU$6696 that Magenta are bringing to the table. Magenta Audio charge considerably less than the parity price (probably) because they are able to pass on some of their margin onto the consumer. In effect, they’re absorbing a portion of shipping, import duties and GST. And it’s a credit to Magenta to that they do so. (But they wouldn’t do it if they couldn’t afford to).

        The AURALiC Aries is a different product from a different brand going to a different distributor with different internal cost structures for (most likely) a different margin.

        To assume the same calculations apply to both businesses is where consumer expectations can go awry.

        • John, I feel like you’re mixing apples and oranges on “parity pricing.” If you’re talking about the Australian consumer’s option of doing a gray market import vs. buying from a local dealer, OK. But if you are comparing retail price in Australia vs. retail price in the US or UK, the cost structures are different. The commercial importer will have different shipping costs, taxes and product cost than the individual. Better exchange rates too.

          So the PS Audio AU$ price looks appropriate to me compared to the US$ price. Auralic, not so much. So if I were an Australian consumer, I would be inclined to simply take my business elsewhere. I imagine that larger, better established companies, experienced in international distribution would be better at it. PS Audio has been around for 30 years, Auralic for 5.

          • Yes, Phil, I’m looking at this from a consumer perspective: eyeing the global market and comparing local prices with those of overseas.

            The thrust of the piece was a) that not all audio gear is more expensive in Australia than its country of origin – occasionally it’s cheaper – and b) the Brits have it bad sometimes too.

            There’s a lot noise made down under about parity pricing and as soon as an item *seems* more expensive locally it’s good to do a grey import calculation (as done with AURALiC and PS Audio). It provides some context for the cost structures faced by commercial importers. Yes, they might get slightly better shipping rates. In the case of AURALiC Aries, I quoted $50 with that in mind. However, they also pay import duty and GST on goods valued at over AU$1000.

            The piece of the puzzle we don’t have is the local distributor’s wholesale price. It’s invisible to the consumer and contains the distributor margin from which he must turn a profit. With a healthy margin at his disposal, the local distributor has the ability to absorb more of those costs. If the margin isn’t so big, much of those costs get passed on in local retail pricing.

    7. John has yet again highlighted the scandalous practice of UK audio distributors currency matching one pound for one dollar. As consumers we acknowledge that overseas gear will cost more due to importation costs, but this disingenuous £1 = $1 parity beggars belief! Thus as an example, the UK audiophile is expected to pay £1,099 for the Oppo PM-1 when our American counterparts pay $1,099 or £640. Does it cost £459 for Oppo (UK) to import the PM-1? Of course not, so screw the consumer and make money.

    8. Aaand.. for a place like Finland – add 10% to the british prices. Unless you’re buing those Penaudios you have a photo there. They’re cheaper for us since they are a finnish product and made in Finland just until recently (Now in Latvia, that should lower the prices a bit).

    9. As a resident of the United States I’ve long wondered and felt bad for those having to deal with a VAT. I’ve exchanged emails and purchased a few more expensive unique items from merchants in Europe that are subject VAT pricing. When discussing the big VAT costs with those European merchants they usually agree that it stifles commerce. Makes sense that huge taxing would help create and maintain a market for less expensive headphone equipment, but I expect many young people progress to audiophile headphone equipment because they’re well use to having ear buds plugged into cell phones and MP3 players.

    10. I too live in the UK and agree that the £1+$1 pricing of audio equipment here puts me off buying. I just feel I’m being ripped off so don’t bother.

    11. Whingeing Poms have grounds to whinge, based upon audio equipment pricing comparisons in this article. But examples cited might not include affordable, fairly-priced indigenous British gear and pre-owned equipment sold on the domestic UK market.

      Like many similar consumer durable industries overall margins on transactions are being whittled down daily. Something’s got to give, be it engineering, manufacturing quality, technical and warranty support, experienced/skilled staff, continuity of distributor etc.

      On-line shopping should, over time, act as a pricing mechanism, assuming supply and demand remain largely unaffected. However this seems seldom to be the case. Short shelf-life accompanies short attention-span. Digital audio is a prime example. Uncertainty affects decision-making. “What if…..then again……maybe not……darn, I missed out!”

      As to Australian audio equipment pricing in the global context, it appears contributing factors remain miniscule market size, geographical isolation and relatively high overheads for distribution, retailing and/or reselling. This could include electrical C-Tick accreditation and local broadcast and format specifications that require limited production runs.

      • All good points there 35YA. Indeed, the cost base for doing business in Australia is high. And yes the market is small.

        However, sometimes Aussies get it good and and I wanted to draw attention to that. Sometimes Aussies aren’t the only ones getting it bad and by comparing pricing with the UK, I wanted to draw attention to that too.

    Clones Audio 25i + Golden Ear Aon 3 = winner!

    KIH #13 – Keeping an open mind vs. being taken for a fool