A common pricing practice used to be to price products differently for different markets. When I worked for Microsoft Canada, for instance, we used to routinely price our products at the US price, converted to Canadian dollars, and then augmented by 10 or 15%… a small price hike that Canadian customers bore for the privilege of being Canadian. Since the English language version was sold in both the US and Canada, the trick was to jack up prices just high enough that a Canadian customer wouldn't choose to buy "grey market" goods from the US. European transfer pricing was even higher, as there really isn't much of a market for German, or Scandinavian language products outside of their home markets.
Transfer pricing still exists in some industries, enforced by egregious contract terms which penalize the consumer for cross border shopping. Just try, for instance, to buy a car and bring it across the border. Chrysler's contract voids the warranty when you do that.
By and large, however, I thought that the practice had become less common in the internet age. Software is just bits, and transfer pricing is hard to justify when you're just shipping bits around. How wrong I was.
This afternoon I tried to purchase Apple Quicktime Pro 7.1. I went to Apple.com, found QuickTime Pro for $29.97, added it to my cart, and tried to check out. Nope… can't put a Canadian credit card or address into the US Apple Store. Heading over to Apple Canada, I discovered that they're asking $37.99. The correct price, converted, is $34.76. To download the same bits in Canada, Apple asks a 9% premium.
Apple isn't the worst violator, though. Microsoft Canada lists Office 2007 Professional Upgrade for $439, versus $329.95 in the US. The correctly converted price is $382.74. That's a 14.7% premium.
It's a stupid and greedy practice which should be abandoned. Canadians already have less disposable income than Americans, due to the tax regime here, and we tend to be much more price conscious than our brethren south of the border. If prices were lower, these corporations might see higher uptake. Certainly when I did the MS-DOS 6 launch here in Canada, we saw that. We priced our software slightly below the US price in order to make a natural C$50 price point, and saw nearly twice the sales.
Transfer pricing: just say no.