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Friday, June 15, 2012

Why I think Australian Retail Prices are fair.

I know, who do I think I am? Well, I'm someone who worked through high school and tertiary education in retail positions. I'm also someone who spends a lot of money on cosmetics in both Australia and overseas. I also have friends in the US and UK who work at cosmetics counters or in retail trade. I also think that as Australians, we're pretty lucky for the opportunities and advantages that we have.

The primary reason that I think our prices are reasonable even though they're priced about 50% higher is our economy and standard of living.

Take, Sarah for example. Sarah works at my local MAC Counter in Adelaide, Australia, as a Make Up Artist and Sales Consultant. She's 24, has worked at MAC full time for 3 years after completing a 2 year Make Up course and earns $43,000 per year which is an average wage in Australia.

Then look at Toni. Toni works at a MAC Store in Chicago, USA, in the same position as Sarah. She's 25, has worked at MAC full time for 2 years and Bobbi Brown for 2 years before that. She is a qualified Make Up Artist and earns $21,000 per year which is an average wage in America.

When I talk about average wages I don't just mean in the cosmetics trade. Retail wages in Australia and the US sit right on the average wage line (about $45,000 per year in Australia and $22,000 per year in the US).

Now lets do a little maths:

Sarah's weekly wage is $827
A MAC lipstick costs $36
That's 4.4% of her weekly wage.

Toni's weekly wage is $403
A MAC lipstick costs $15.95*
That's 4% of her weekly wage. 

That's less than half a percent of her wage more that Sarah is paying when compared to Toni. When you take import tax, shipping fees and General Service Tax into consideration when buying your product in Australia our prices are incredibly even.

The moral of my story is that I have been to the United Stated, I know how cheap everything is and how it seems unfair but would you really want our retail goods to drop in price by 50% if that meant that your wage would drop by 50% also?

Our prices are higher because we are higher paid, the person selling you your lipstick earns $22 per hour, you need to help pay for that. In the US that same person earns $11 per hour, the cost of products are less because the person behind the counter earns less.

It all evens out. 

By no means am I suggesting you only shop in Australia (we all know I am a sucker for huge hauls and overseas purchasing) but I also think it is important to contribute to the retail trade of your own country and also understand why our prices are much higher.

So there's some food for thought for you.

Happy shopping! (in which ever country you choose)

*A MAC lipstick in the US costs $14.50 plus tax, average tax is 10%. $14.50+10%=$15.95


Chelsea said...

This is SO true. We spend alot of time in the USA and have many friends there, and while I shop up a storm there, I remember that it's cheap because they're not paid as much.

EG: a meal, $8.50. The person serving it is probably paid $4/hr plus tips. Aus: $20 for a meal. the person serving it is probably paid $18/hr with no tips. It's all relative :)

Ty said...

I totally agree with you!!! I worked in retail as well. I did a similar post some time back except the focus is slightly different. I think yours is better written than mine! :)

Rachel said...

This is such a great post! Agreed that even though we love shopping overseas, we should be contributing to our economy too!

emma said...

So true, had never thought about it like that before though. I love reading things like this. Thanks for another great post :)

Ailyn Koay said...

unfortunately you forgot we pay heaps in terms of tax too. Did you ask how much their electricity, water bills and land tax cost?
Tell me it is fair once you even that out ok?

Anonymous said...

I agree with Ailyn: our living costs are heaps high and affording a $33 single eyeshadow isn't high on someone's list if they're only making an average amount. If that makes sense.

Rebecca said...

You're correct, the cost of living is far less expensive in America. Electricity is about 60% cheaper, fuel costs an average of 50c a litre, general groceries are priced 40-50% lower and cars are a good 30% cheaper. But when Americans earn approximately 55% less than Australians, it's all on an even level.

Then take into account medical bills. In Australia if you need to see a doctor it will cost you $55 up front then you receive $30 back which leaves you only paying $15*. In America, you pay $100 before you even see the doctor, $100-$150 upon leaving the clinic and almost double the cost of our prescriptions in Australia if you need any medication. A doctors visit will cost around $250. If you need to spend the night in hospital you'll be paying $8,000, if you have a baby you'll pay more than $20,000 in medical fees. If you choose to get medical insurance it will cost you more than $100** per month, per person. Most Americans don't have medical insurance.

Housing in American is approximately 20% cheaper than in Australia, but again, Australians earn 55% more than Americans so we're still better off in this regard.

If you are unemployed or need financial assistance, we have a fantastic government benefit system to help you. We also have lower interest rates on personal bank loans.

When you take all of this into account, Australians are still better off financially. Even when particular items or amenities are priced up to 50% lower in the US, we still earn that much more than the average American.

I would love to live in America where every thing (except medical assistance) is cheaper, but I wouldn't like to take the same 50% wage cut :)

*Bulk Billing medical prices vary with each clinic.
**Depending on the type of insurance and cover you choose.

Ailyn Koay said...

a very good point Rebecca.
unfortunately we do pay for Medicare (it's called loading) every time we pay tax, and on top of that there's private health.
depending on how you look at things, sometimes it does not justify our retail sector being bogged down with huge rental fees, multiple taxes, that is even after paying our minimum wage.
my point is, even if our wage is higher, retail sector is dying (even when we are paying 4.4%) because of the taxes and stuff.

So it's not to say I do not agree paying more, but when paying more does not help an industry, we should be reviewing it.