Apple Watch’s high SA pricing explained

October 12th, 2015
Tech giant Apple’s smartwatch range will go on sale in South Africa on October 23, but questions exist over its high local pricing, writes GARETH VAN ZYL.

The official distributor for Apple products in South Africa, Core Group, on Friday revealed recommended pricing for the Watch range which will be on sale in the iStore, Digicape and Incredible Connection stores.

Pricing is expected to range from R5 899 for the 38mm Apple Watch with a silver aluminium case and white sport band to R18 499 for the 42mm version with a space black stainless steel case and link bracelet.

The local pricing, though, is higher than the prices these products are advertised for on the official website in the US.

The 38mm Apple Watch with the silver aluminium case, for example, is advertised at $349 (R4 651) in the US whereas Core Group has recommended retail pricing of R5 899 ($442) for the same product.

In another example, Core Group has recommended retail pricing of R9 999 ($751) for a 42mm Apple Watch with a stainless steel case and a red sport band. On the website, this same device is advertised for $599 (R7 968.50).

Core Group told Fin24 on Monday that “there is a perceived difference between pricing in South Africa and the United States, with regards to the importing of Apple products by Core Group”.

“Firstly, US prices are quoted online exclusive of any sales tax, therefore, as a starting point, you immediately need to deduct 14% VAT (Value Added Tax) off the advertised price in South Africa,” Core Group spokesperson Tanya Kovarsky told Fin24 in an email.

“Secondly, certain of our products attract ad valorem and import duties. This is particularly evident in the case of iPods which attract 25% duties,” said Kovarsky.

Core Group also pointed to the fluctuation in the rand-dollar exchange rate as having a negative impact on pricing.

It explained to Fin24 that it has entered into foreign exchange contracts (FECs) which result in pricing being locked in a fixed rate valid for a particular period of time.

“These FECs are intended to protect the consumer against continual fluctuations and unfair increases in pricing, but if the exchange rate improves, consumers perceive that the South African retail price should be much closer to the US retail price,” said Kovarsky.

“Core Group is not the only company that experiences the above challenges, and this is evidenced by the price differences across a broad spectrum of product categories,” added Kovarsky.



Leave a Reply

Your email address will not be published. Required fields are marked *

9 − 2 =