When making a big purchase, such as rings, cars, medical procedures, or the like, there is a tendency and rationale for price shopping. On a larger scale, people can compare physical and online retailers, as well as the location of the purchase. For example, on a $50,000 car, saving 10% by buying overseas is $5,000, enough for a decently long vacation. Or, saving 3% on a $20,000 piece of jewelry will fund some roundtrip ticket ($600) to that international store. If you can get an equivalent item for a much better price overseas, why would you not make that trip?
Price Shopping Factors
There are several comparison points, in addition to the price, to be aware and knowledgeable of.
What are the local, state/province, or country taxes on purchases outside your home base? Are there customs declarations or other fees paid for international but not domestic purchases? Any other sort of export/import duties? Comparing the total cost after taxes & fees is key.
Is the quality of the product (rings, cars, etc.) or service (surgery, medical work) comparable or better than that domestically? Is it readily comparable with local options?
What is the current and historical conversion rate from the country in question to your home country? Any future trends expected? If your economy is expected to be strong, you can reasonable expect currency appreciation making the international purchases cheaper by comparison. Are there macroeconomic factors that come into play that would affect the exchange rate, such as government or monetary policy? This is but a minor factor, but a favorable rate helps the purchase decision.
Security & Transportation
When purchasing a product, is there a danger of theft? For example, a ring that has to travel from overseas is at a greater threat of damage, loss, or theft, when compared to one purchased locally. Are you accounting for increased shipping or insurance charges?
Are you able to find customer service options locally, for a product purchased overseas? Most international companies offer this as a perk. However, if you purchase a product with a strictly international brand it may be difficult to modify the product in the future.
Where did this come from?
This came into play when I was researching a large purchase of my own. I have the fortune to be able to travel around the United States, and inquired to the government tax policy. According to many retailers, tax is assessed based on the destination of the purchase. Tax is based on the state of residence, registration, or where the item is shipped. Thus, wealthy customers cannot bypass the local or state tax rates by flying to a state with a lower rate, making the purchase there, and flying it home.
While I think there are better priorities for the government in terms of tax collection, reform, and closing loopholes, it certainly evens the playing field for retailers. They no longer need to compete with other stores within the same company for business.
I am planning a longer international trip this year, utilizing all the points I have generated over the past months, and thought about price shopping internationally. While local associates may be biased, they advise against it as international prices are higher. This may depend on what you purchase, so I highly advise you to do your own due diligence and find out for yourself!
Featured image from Unsplash of a luxury car – a classic item for price comparison.
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Thanks, Daniel, for your insights
Thank you for reading!