Friday, January 11, 2008
O Canada
There is nothing worse than your kid asking you a question that you have no clue about. Tonight we were in a bookstore and she was trying to decide which book to buy. The fact that she was looking a the price was good news to me since she was buying it with her allowance. Then, she hit me with the question, one that I never considered before and I read my fair share of books. "Daddy, why do books cost more in Canada?" Usually, I'm quick with an answer and then remind her that I'm the smartest person she knows. This time I was like...."Ummmm, because.....umm...well....er....I'm not sure." I just searched on Google and I'm still not 100% positive. I've seen "Canadians care more about the environment and trees and don't mind spending more for these types of products because of that" (I don't buy that theory). Another one said it's because the cities are far apart and not very populated between the large cities and it's a lack of infrastructure. Then why not all products with a suggested retail price printed on them? Not sure about that either. Another mentioned taxes and import fees. I couldn't find a definitive answer on the first page of any Google search I tried. If anyone knows the real answer (not a guess) please post it and a link to your source. I can't explain why a $4.99 book in the US sells for $6.99 north of the border.
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6 comments:
http://www.usatoday.com/money/economy/trade/2007-09-24-dollar-parity-books_N.htm
I beleive the cost difference has something to do with the exchange rate between the US and Canada. As the value of the US dollar weakens and the Canadian dollar increases the price difference will change over time.
Not 100% sure but sounds good to me.
It's almost entirely due to the foreign exchange rate between the US and Canadian dollar. A few months back the Canadian dollar drew even with the US dollar. And persistent weakness has caused Canada to pull ahead. When the FOMC lowers interest rates again this month, lookout below!!
Case in point. In 1995 I worked at a liquidation sale at the Niagra Falls, NY Convention Center. We were overrun with cash customers from across the border trying to pay Canadian knowing the change would be given in US.
Since I am essentially a lazy bastard, I had the Canadian customers exchange their Canadian currency to US at one of the many "money laundering" facilities nearby first. It was too much of a pain in my ass to program in the exchange rate when the customer was tendering with Canadian currency.
But the bottom line was the Canadian were looking to get their hands on US greenbacks cause they were worth more... probably about 20% more back in those days.
Now fast forward to late this summer when Mrs. Dog went to London, Ontario for business. At this time the Canadian dollar had just surpassed the US dollar in value. The Canadians did not even want to look at US cash. Fortunately business travelers usually pay by credit card in which the exchange rate is automatically distributed between the merchant and the customer.
Some credit card companies used to add a surcharge for currency conversion which apparently has been deemed illegal. I just received a notice from the US government about a one time settlement of a class action lawsuit to recover my surcharges from trips to Iceland and the UK between 1995 and 2007.
Armed with this information, Daddy is NOW the smartest person in the whole world.
Still I wonder... how much is that Terrance & Phillip DVD "Asses of Fire" in US dollars now??
but that doesnt answer my other point....why doesnt every product that has a suggested retail price either on the box or printed on it somewhere (not a tag) have 2 prices on it...one for US and one for CANADA?
Suggested retail prices are printed on products for several reasons. But almost exclusively to maximize the profit margin for the retailer/supplier and to maximize the perceived value to the customer.
A retailer can discount an item by lets say 15% off the MSRP which is overly inflated to begin with. He retains his margin and the customer believes he's getting 15% off.
When you add the foreign exchange element to this equation it's simple economics... whatever the market will bear. If Canadian customers are willing to pay $2 more for a $10 item then they'll print that price on there, and get it. Nobody ever stops to compute the exchange rate because it fluctuates every day. But now that it's even, the Canadians are up in arms and rightfully so.
The answer is they print two prices when it's to the advantage of the retailer/supplier. If it's not on there, either the product is not distributed to Canada for sale or the company feels there is no ecnomic advantage to doing so. It is most certainly not for the convenience of the customer. Caveat Emptor again. Let the buyer beware.
I know the price difference is because of the exchange rate - that comes from working at Mellon and Walmart.
Dont know why it is printed. But books are one of the few things left that prices are printed on.
Picture this hilarious scenario:
A customer from Canada comes to a US Walmart for a refund - and just sit back and watch the show of stupidity at the courtesy desk.
I had many hours of entertainment from that. It took Walmart managers 10-20 minutes just to find the phone number to call to get the current exchange rate.
I still get a good chuckle over that.
well check out the big brains on the Slanted Pack. just seems weird to me that books and magazines are two of the only things i can think of that have 2 prices on them. can anyone think of another item that has both?
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