The labels that show how much more international retailers charge Swiss

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Investec
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To simplify labelling, many international retailers put recommended retail prices (RRP) for multiple nations on the same label, like the one below.

The Swiss retail price premium laid bare.

Labels such as these show how much more Swiss customers are being charged compared to customers in other countries.

The label above, from an item of clothing sold in Switzerland, shows how much more Swiss customers are charged.

The RRP for Switzerland is the highest. The Swiss pre-VAT price is 21% higher than the average of the other nine countries in the chart below.

The comparison focuses on pre-VAT prices because these reflects the true return to the retailer.

All of the prices across Europe are reasonably close except for Switzerland, which appears to be singled out. The Swiss pre-VAT price premium ranges from 18% to 27% depending on the comparison nation.

This price premium calculation uses average exchange rates across the last 12 months.

How can such a price premium be justified?

Because of Switzerland’s relatively low payroll taxes, the effective cost of staff in Switzerland is typically lower than in many other European countries.

Next time you come across a label like this in Switzerland it might be worth running the numbers and asking if they will accept euros, pounds, zloties or krona. If you do make sure you use a card that offers a decent exchange rate. Many cards issued by Swiss banks and financial institutions charge fees and pad exchange rates with an undisclosed 2% to 3% margin.

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About Investec

Investec is a distinctive Specialist Bank and Asset Manager. We provide a diverse range of financial products and services to a niche client base in three principal markets, the United Kingdom, South Africa and Australia, as well as certain other geographies. Investec’s strategic goals are motivated by the desire to develop an efficient and integrated business on an international scale through the active pursuit of clearly established core competencies in the group’s principal business areas.

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