Exchange Rates – Why Companies Should be Wary

Apple faces the music – the dangers of exchange rates

Headlines such as ‘Apple faces the Music' reveal the dangers of exchange rates for companies that sell the same product in Britain and on the Continent. The European Commission is probing Apple about the fact the multimedia giant charges higher prices in Britain for music downloads than the rest of Europe.

Exchange Rates in Europe

So how do exchange rates impact on the cost of downloading music? In the UK, it costs 79p to download a song, but the rest of Europe can download a song for 99 euro cents. The current exchange rates put that at just 67p – a whole 10 pence cheaper for European customers.

Exchange Rates put Apple under the spotlight

As a result of the variations in price at the current exchange rates, Apple is now facing a potential fine of over £300m. iTunes have a powerful line up or popular artists including Robbie Williams and the Rolling Stones.

iTunes and piracy

Music downloading has faced a raft of problems including illegal downloading and sharing which has impacted on the music industry as a whole. Apple's songs are also sold for 99 pence in return for EMI giving up software protection to prevent piracy, which means customers will be able to copy EMI material to MP3 players.

Discriminatory – current exchange rates reveal unfair pricing

But the same songs that cost 99p in Britain cost just 88p in Europe – or €1.29, showing that judging by the current exchange rates, the pricing is unfair.

Same product – different prices

The difference between charges highlights how exchange rates can be exploited to capitalise on different markets for the same product, and selling products to Britain using the pound and to the rest of Europe using Euros reveals how consumers need to be more aware of the differences in exchange rates. There is still a general confusion and ignorance about the Euro and how many Euros you get for a pound at the current exchange rates. Being aware of current exchange rates can help consumers be more aware of variations in prices so they don't make the mistake of buying exactly the same product at a more inflated price simply because they are using pounds rather than euros.

Foreign Currency Exchange Ltd is a commercial currency brokerage based in the UK. We help thousands of clients move hundreds of million pounds across the globe every day. From large businesses to private individuals who wish to send regular payments abroad, you can save money with us by getting better currency exchange rates than with your bank. The Foreign Currency Exchange buys currency at wholesale rates and can help you save money with our fast secure service. For more information contact us now, telephone +44 (0) 20 7989 0000 or email info@fcexchange.co.uk