Nvidia and AMD recently announced their next-generation of graphics cards, both of which seem to offer better cost-to-performance ratio than previous products.
However, these cheaper prices don’t necessarily translate to the South African market – with the cheapest GeForce GTX 1070 coming in at R8,499.
The same card was originally announced in the US for a RRP of $379 (R5,790), a difference of R2,700 at the current exchange rate.
We asked Rune Ravnsborg, owner of Rebeltech why there was such a large discrepancy between the South African and US pricing:
“The answer to this question is, unfortunately, not simple at all as there are many factors that are taken into account when working out the retail price on products,” said Ravnsborg.
“In an ideal world, all products would cost of the same per region and the only conversion required is the simple application of the exchange rate. This is not the case.”
The math
The basic math of Buy Price (Dollar) x Spot Rate of Exchange (RoE) gives a very inaccurate value and does not entirely account for the retail price.
In order to arrive at a more accurate price, we must include factors such as transportation costs, customs duties, VAT and markup.
The best calculation to get a near-accurate landing price (this is a retailers buy pricing before he/her adds his/her own markup) is this:
(Buy Price x RoE) + VAT (14%) + Custom Duties (+- 8%) + Transportation (+- 2%)
This calculation results in a much higher and more realistic landing price.
The real world
For the Nvidia GeForce GTX 1080 Founders Edition, the MSRP was listed at $699, which means the buy price is $649.
Using the calculations above, a simple exchange rate conversion would result in a price of R9,929.70. Using the more accurate calculation results in a landing price of R12,480 (excluding markup).
It is important to note that South Africa does not pay the same prices as North America, as our market is much smaller.
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You know what, a lot has been said about the prices surrounding GPU’s and PC hardware in SA in general so what I’m going to do is just highlight a few pointers to blatantly point out how these prices are really just absolute nonsense no matter how much they try to explain or justify it.
Firstly: Alot has been said about the retailers using the RRP as the base to import, which we all know is inaccurate they pay much less for the card when they originally buy it in Taiwan. Yet when we as the public buy from Amazon or Newegg at the actual RRP we still end up paying less by far then the retailer sells it for here in SA despite the fact that we also have to pay all those costs you use to justify the price, e.g. The ACTUAL RRP + VAT (14%) + Custom Duties (+- 8%) + Transportation (+- 2%), explain that to me please?
Secondly: This is how crazy that price is blown up if reversed: RRP – $199 translates to R6000 apparently aka $416, more than double the US selling price, How, explain?