Adobe, which has faced criticism for the high price of its software in the UK versus its US price, has responded to its critics by saying that the difference in the price was because of many factors, and particularly the "economies of scale of doing business in the US".
ZDNet.co.uk recently reported that the Creative Suite 4 (CS4) Master Collection flagship product will cost £2,313.58 in the UK, according to Adobe's pricelist, and just $2,499, or £1,358, in the US: a saving of over £1,000.
Last year, the issue also also caused criticism at the launch of Creative Suite 3.
ZDNet.co.uk approached Adobe for comment on our original report about the CS4 pricing discrepancy, but the company said it was unable to comment at that time. On Wednesday, that comment was forthcoming, and the company explained the reasoning behind the high price in the UK.
Deciding on the pricing is "a challenge for us" said Dave Burkett, vice president, business operation, Creative Solutions at Adobe. "We really talk to our customers to get the pricing right."
One factor was the relative "cost of doing business in the two countries", Burkett said. "We want to make sure that we are giving them the best products and at the right price."
There are two main factors, Burkett said. The first factor was "the cost of doing business in each country and in the US we get economies of scale", he said. "For example, there are many more resellers in the US than there are in the UK and in other countries." The cost of doing business varied, he said, and there was a significant difference in that cost "between say, London and Milan", he said.
Also, Adobe markets its products directly to the customer, and Burkett said that, in the UK, the company was running the Creative Pro Expo in London over three days later in the month, together with major exhibitions and presentations of the new CS4 software at seven other venues in the UK and Ireland. These were expensive to set up and organise, Burkett said. He also pointed out that CS4 was available in the UK "at exactly the same price as CS3 was and there are many more features in CS4", he said.
The second major factor, said Burkett, was that "there is a difference in the perceived value of the product" between different countries. "We reach out and try to find out what that value is and why."
In addition, as part of the launch activities around CS4, Adobe was introducing some special prices on some of the individual Adobe products, said Burkett. Photoshop, for example, will lower its cost by £197 while the promotion lasts, which is until the end of March 2009, according to Adobe.
One point Adobe wanted to clear up was the actual price it was charging. The price of the flagship Master Collection was £1,969 excluding VAT, and £2,313.58 including VAT, and not ex-VAT as originally indicated.
Talkback
Unfortunately its not just Adobe that essentially ignores exchange rate and swaps the US $ sign for a British £ on its prices. Canon recently have done exactly the same thing on their recent cameras. But somehow Nikon managed to avoid this!
In the article the representative says: The second major factor, said Burkett, was that "there is a difference in the perceived value of the product" between different countries. "We reach out and try to find out what that value is and why."
So basically what he's saying is we see what we can get away with charging for the product. For whatever reason those in the UK will pay more, so consequently Adobe charges more!
Unfortunately I'm willing to bet that Adobe's US sales will include all those people in the UK who buy the software in the US and then bring it back. Often even paying VAT to bring in into the UK still makes it far cheaper. Perhaps they should set a price that is reflective of the exchange rates in each country and then there might be suddenly more demand for their products (I'm thinking there would be!).
There is no doubt that what Adobe is doing is the same as many US software companies. They fix a price based on what they think they can reaonable get.
Their sales will very likely reflect this as well which suggests that if they did reduce their prices to more accurately reflect the US price their sales should reflect this and rise accordingly.
Open source has shown us that it is possible to get much cheaper, even free software but we also know that the more advance functionality will rest with the expensive suites that from companies that have spent the money on R&D.
So what is to be done?
Well, maybe a compromise is the way forward. Pricing that is at least bought more in line across a company so that what somebody pays in Spokane is not so different from what they pay in Slough? But if it is to be done, how is it to happen?
Perhaps there the Adobe users that have their own ideas. It would be interesting to hear from them.
I think Adobe is talking nonsense re the re-selling as do many other companies. Much software can be downloaded - no resellers needed - and yet it is still more expensive in the U.K. Why? My feeling is that the mugs in the U.K. will pay the price whilst Americans will not. I will not - software I require I buy from America and when I get 'no UK customers' I get it sent to an American friend. If more folk in the UK refused to pay these extortionate prices then all the companies would be forced to bring their prices down to a level playing field. Companies have still not realised that they would sell far more if the software was a sensible price and not set at something which only companies or the very few can afford. They would like to stamp out illegal copying - the solution is in their hands!!