I’ve written here many times about the sterling to euro price conversion controversy – everything is available here.
We haven’t really jumped on the band wagon as we’ve mostly tried to be objective about where some of the price differences might come from – while also acknowledging that there is probably also some price gouging going on by many retailers.
Recently, a new website called DualPricing.ie has been developed which is designed to provide more information to help consumers work out if the conversion rates used are fair, or if they are actually being ripped off. From the person behind this great idea which you should definitely check out, Jamie Lawrence, here’s what the site can do for you:
A while back I remember reading (on ValueIreland) about a Dublin radio station that were running a campaign to expose stores that had excessive differences between their UK and Irish prices. Then came the VAT hike in Ireland and the cut in UK rates, which exposed how much of a difference tax actually made to the price gap. Now that the currencies are almost on a par the subject of dual pricing has come up again but the problem with all the talk about price differences is the consumer’s lack of information. On the one hand, the retailers will cart out every conceivable reason for the huge price differences: higher rates of tax, duty, wages, rent, utilities, transportation and currency fluctuations. On the other hand, the consumer doesn’t really take anything into account when they see £10 translating into €15 on a price tag in the shops — they don’t have a calculator to work out the real difference. So, I went home that evening and developed DualPricing.ie.
DualPricing.ie is a really simple site that takes a UK (£) and Irish (€) price of an item from the same store and eliminates the known variables of VAT and currency. Basically, if you deduct the appropriate VAT rate off each price and convert the ex-VAT UK price to euros, you can now get a clearer comparison between the two. There are still unknown variables which might account for the price difference but we now have a more transparent comparison. Of course, we also collect all these comparisons to produce average ratings for each store.
The site itself is educational and I learnt a lot from spending a morning in Mahon Point Shopping Centre, noting down UK and Irish prices (much to the bemusement of the staff) and comparing them.
First lesson: many of the stores have removed or covered up their Sterling prices. I believe that this is to remove “customer confusion” — although where some say “confusion”, I say “information”. From my brief expedition it seems that Ladybird and Principle tear off the UK price; Next, River Island and Marks & Spencers place labels over them; Adams Kids displays both; and Debenhams also carries both prices (except on fragrances).
Second lesson: Irish prices are, on average, 30% more expensive than UK prices (after eliminating the VAT and currency differences). Many of the stores also seem to use standard numbers so, for example, £5 will convert into €7.50. I find the 30% figure a little hard to swallow but I’m also suspicious of the nice neat numbers. I’m sure that Irish prices should be more expensive but if there really was a defined rate wouldn’t our prices be a little more random? Perhaps €6.80 or €7.10 or €6.67 would be more believable?
Third lesson: The VAT rate can make a surprising amount of difference, particularly when different rates apply. For example, in the UK newspapers and magazines are zero-rated VAT items but in Ireland they are taxed at the reduced rate — on an average magazine, about 9% of the difference is accounted for by VAT alone! What’s particularly troubling is that items which are zero-rated in both countries (like children’s clothes) tend to have higher price differences applied to them, which implies that the company was accounting for VAT differences that don’t exist.
I’m not an accountant or economist so I’m trying very hard to be non-judgemental about these price differences and just let the facts speak for themselves. I hope more people will contribute to DualPricing.ie so that we can build up a clear picture of how bad the price differences are, and which stores are the worst offenders. It would be even better if someone could produce a complete breakdown and justification of those differences…