They’re not even the same currency at all, yet Steam or any other digital storefront decides to price a 80€ ($91) game the same as a $80 (69€) one when the conversions in reality are different to what the algorithm suggests. It’s reflected on Steam DB that Euro has a higher markup in comparison to US Dollar because of this, since I hear EU players nagging about paying 80€ at launch the same as US players don’t like paying $80.
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It’s normal to price games lower in less privileged countries.
shots fired
I heard it’s common over there
Do EU prices normally include VAT? US list prices for games cannot include Sales Tax, because the tax can vary widely by State (or even by local government).
Yes, game prices include VAT. In Europe any displayed prices be they in a supermarket or on an online store always include VAT. It’s not even allowed to advertise prices without including VAT.
That’s not strictly true, because online shops for tradespeople often have a toggle to control whether VAT is included (and switch it off by default).
That’s a special case though, because VAT is handled differently between businesses
I think the toggle is there if they sell to businesses without tax
From what I know businesses still pay the VAT but they can get it back from the government later.
On many online B2B stores you can just enter your VAT number and you don’t have to pay the VAT as a business.
It depends on the tax system, Europe and North America have it work differently.
When I buy supplies in Europe for the (Swiss) company I work for I often get the B2B website that does not display the VAT, but then in the final checkout step and on the invoice the VAT is definitely there.
I’ll try to explain the differences the best I know them:
In Europe everyone along the value creation chain pays the VAT to their suppliers and collect the VAT from their consumers, and in the end only the collected tax minus the tax paid out to suppliers goes to the government. So in effect everyone pay the tax on their part of the value creation.
(Example: You buy inputs for 100€ and pay an additional 10% tax (10€) to suppliers. You turn them into products worth 500€ and when selling them collect an additional 10% tax (50€) from buyers. Then you send 50 - 10 = 40€ to the government, which is also 10% of the 400€ value you created. The other 10€ reach the government from your suppliers and their suppliers)
In the USA the sales tax is only charged on the final sale as it goes to the consumer market. As long as you can prove you aren’t a final consumer you don’t pay the sales tax.
(Example: You buy inputs for $100 and pay no tax since you are not an end customer. You turn them into products worth $500 and when selling them to end customers you collect an additional 10% tax ($50). The entire $50 goes from you to the government.)
The economic effect should be roughly identical, but one system could be easer to game, the other more complex to administer.
Edit: Another thought, maybe the European System makes it easier for the EU because the revenues are automaticually distributed fairly according to where the value creation happened in an integrated economy system with multiple countries.
I know how it works I live in the EU. I think the VAT exemption is possible when you buy digital goods. Ive bought plenty of things on websites where I can just enter my business VAT number and don’t pay the VAT
Edit: apparently the rule is that on b2b cross border sales between businesses in different EU countries there is no VAT charged.
https://europa.eu/youreurope/business/finance-and-tax/vat/cross-border-vat/index_en.htm
I’m sure my electrician wanted painting cash for some other reason, he was definitely going to pay his taxes.
Taxes are always included in europe, so yes… though im pretty sure even with the sales tax games in the US end up being cheaper :p
I dunno. If someone sets the price at the same number…let’s see.
The current exchange rate is 1.1486 dollars per euro.
https://www.tradingview.com/symbols/EURUSD/
I’m pretty confident that VAT is higher than that in some countries in Europe.
searches
https://taxfoundation.org/data/all/eu/value-added-tax-vat-rates-europe/
This says 19% in Germany to 27% in Hungary. Mostly 20% or a little higher.
That assumes that whatever prices OP is looking at does indeed include VAT for the EU price (which would require knowing his location), and does not include sales tax in the US (which even aside from US convention of showing prices sans tax, presumably is the case if he’s not in the US, as there’d be no way to calculate sales tax anyway, since that would require a specific location in the US).
The prices don’t look to be that far off in that scenario, but the EU price would be slightly lower.
EDIT: Wait, Hungary is one of the EU members that still doesn’t use the euro, right? They use, uh…forints?
goes looking
Yeah:
https://en.wikipedia.org/wiki/Hungarian_forint
So assuming—I don’t know—that in Hungary, Steam lists prices in forints rather than euros, I’m guessing that there probably isn’t a 1:1 dollar:forint price ratio, as a forint is nowhere near a 1:1 exchange rate with the dollar.
EDIT2: Well, unless a publisher uses a 1:1 dollar:euro ratio for the price and then Steam auto-converts to forints before displaying a price to a Hungarian user or something, I guess.
Part of it is that EU countries charge VAT on digital sales and prices must include it, while in the US there’s sales tax instead, which depends on the state and is only added at checkout time (and also often lower or even zero for digital goods). For example if I pay 80 Euro in Germany, then Steam gets to keep 67 because those 80 Euro include 19% VAT.
The other part is that in a market economy, prices are determined by what generates the most profit, and not necessarily related to cost or based on fairness. EU customers apparently pay 80 Euro often enough that it makes more money than 60 or 100 Euro so developers set their price to 80 Euro.
Steam or any other digital storefront decides to price a 80€ ($91) game the same as a $80 (69€)
- Steam itself does not decides the prices.
- Regional prices is meant to be uneven, as countries have different living standards and the conversion rate is not always the same.
Question:
- European prices include taxes already. Does the US price shown with or without taxes before checkout? I don’t know that actually. This could be another factor in different price shown.
Sales tax in the US doesn’t get added until you hit “continue to payment” in the cart
It’s because one of the basic ideas of free market capitalism, that competition between suppliers will drive down prices to the lowest sustainable point, is a lie.
Everyone selling anything aims to be a price taker. That is, rather than sell for the lowest price that keeps them afloat they sell for the highest price they can get.
I mean, there is no competition, so why would not valve overcharge? They’re obviously not even interested in changing the 30% fee which hasn’t changed since 100gb HDD was at €500 and internet was metered in megabytes, at this point valve makes 3x more money per employee than next 3-4 companies combined. There are even ongoing lawsuits about Valve and anti-trust practices like telling devs you can’t sell your game cheaper on competitor platforms. Reminder that valve is a corporation, just because they’re less evil does not mean they’re your friends.
Since digital copies cost nearly zero to make, prices of digital goods such as video games are completely arbitrary anyway; they are set to whatever people are willing to pay.
The conversion rate between EUR and USD is so ridiculously close to 1 that it makes sense to treat them as essentially equivalent. If you don’t, you’ll just spend unnecessary effort converting to and from numbers that aren’t round.
1 dollar equals 87 euro cents. How is that ridiculously close?
Compared to many other currency conversions in the world, it is very close. When I read prices in USD, I think of them as euro prices in my head.
Having the choice to pay 100eu or 87eu for something, i doubt a lot of people would say it is the same thing.
Yep. 87 is fine at being almost 100, but 100 is entirely way too much
All prices are set to what people are willing to pay
But for physical goods, the minimum price is what the store paid for acquiring or producing it in the first place. That isn’t a consideration for digital goods.
Its less of a consideration, I would say the cost of selling a disc based game is not a hugely different cost to selling a digital game for major players in the industry
A disc as well as its packaging still cost money; also, a physical store needs to pay rent and salaries.
Since the marginal cost of selling additional digital copies is zero, I’d hazard that it’s priced that way because Europeans will pay that much and companies like to get money
In Soviet Russia, State price games and then games play you!
I like how the correct answer is written here multiple times and yet people choose to upvote others
