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PSA: Apple raises minimum iOS apps price from 69p to 79p

Author:
Jonathan Lester
Category:
News
Tags:
apple, iOS games

PSA: Apple raises minimum iOS apps price from 69p to 79p

Good old Apple. They're incredibly conscientious about all things tax-related, so now that VAT is deducted based on the customer's region (not Apple's Luxembourg HQ) due to new EU legislation, they've hiked the minimum price to compensate. How nice of them.

The minimum price for paid iOS games and apps is now 79p, not 69p, with prices retroactively increased across the board. "These changes are being made to account for adjustments in value-added tax (VAT) rates and foreign exchange rates," apparently.

Still, it's hardly going to break the bank -- and there's a case to be made that mobile games have become seriously devalued over the last few years, partly contributing to a slump in creative risks and overall quality. Either way, consider yourself forewarned.

Add a comment3 comments
Tsung  Jan. 9, 2015 at 13:02

To be fair they haven't passed any costs directly onto us, VAT is paid by the consumer after the price is set.

So that £1 app, with 20% vat will cost £1.20
If VAT goes up to 25%
The £1 app is still a £1, but we with the new vat rate it's now £1.25

Of course it's all rather convenient that it has gone up by exactly 10p. I guess apple have put the price up a little to help us out (don't want us paying 77p for an app, 79p is a much nicer value).

JonLester  Jan. 9, 2015 at 13:11

To be honest I was feeling a bit bolshy this morning. ;) I've explained the reasoning more comprehensively.

Last edited by JonLester, Jan. 9, 2015 at 13:12
Late  Jan. 9, 2015 at 14:54

We have to put prices up because the UK has a high rate of tax, and exchange rates keep fluctuating. Should I laugh, or cry?
There's lies, damned lies, and accountants...

January 2014:
Luxembourg VAT rate 15%
UK VAT rate 20%
£GBP to €EUR rate 1.2045

January 2015:
Luxembourg VAT rate 17%
UK VAT rate 20%
£GBP to €EUR rate 1.2802

Consider that the 69p apps were really 60p plus tax (at 15%).

The increased VAT rate in Luxembourg would account for putting the price up by 1.2p
The increased VAT due to consumer location would account for putting the price up by a further 1.8p
Changes in the exchange rate would account for putting the price down by 4.5p

So the net effect of changes to VAT legislation and variations in exchange rates mean prices should have actually fallen from 69p to 67p or 68p.

No, the 10p increase is nothing to do with tax and currency variations. It's all about increasing your profits.

At the end of the day, after accounting for VAT and exchange rates, Apple Lux were receiving €0.7274 for each cheapo app we bought a year ago and they're receiving €0.8428 for each one now.
Must be nice to hike your prices up and blame it all on outside factors, whilst really increasing your profitability by sixteen percent...

________________________________________________


EDIT - I should probably mention I've taken a few liberties there. For instance, I've treated Luxembourg as the destination of the funds, when in reality most presumably goes to the USA. And whilst the GPB has strengthened against the Euro, it's actually slightly weaker against the USD than it was a year ago. So I've argued Apple Lux are earning more than they were last year when it's actually Apple US who get the money. (That exchange rate change would actually justify putting prices up by 3.5p - and when you combine it with the VAT increases it means prices should have gone up from 69p to 75p or 76p.)
Any way you look at it, though, it's just a price increase, to earn more money, and can't really be blamed on external factors.

Ultimately, I've just used a bit of spin.
Like the Apple PR people did when they announced the price increase.
The only difference is I've been completely transparent about it...

Last edited by Late, Jan. 9, 2015 at 16:19

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