Par dollar, price gouging and competitive balance
This is a little off topic from my regular posts but it is relevant. For those of you south of the border you likely don't follow the Canadian/US exchange rate (for that matter who is our Prime Minister?). Canadians follow it closely, because the great majority of goods we purchase come from the US so the exchange rate affects our cost of living (plus Canadians have a perverse need to follow all things American). Over the past year or so the US economy has gradually declined while the Canadian economy has been booming, the exchange rate difference has been gradually getting smaller and just recently it has been hovering around par ... for the first time in over 30 years!
For the average joe that likely doesn't mean much until you consider what the average American pays for goods vs what the average Canadian does. A Toyota Prius (20,950 vs. 29,500, 40%), Mac Book Pro 17" (2,799 vs 3,099, 11%), Adobe CS 3 Bible (49.99 vs 59.99, 20%), flight from Buffalo to LA vs flight from Toronto to LA (almost exact same distance) (239.60 vs 1,258.20, 524% ... cough) . So my Canadian dollar is worth the exact same as the American dollar when I go to the bank, the NAFTA (free trade) agreement means these goods cross our borders with no tariffs, yet Canadians are getting hosed.
The other reason for this post is that unlike most Canadians I happen to have the majority of my income paid in US dollars since I mostly do contract work for American companies. In the past this has been great for two reasons. First, with a weak exchange rate I could get paid a good rate in US dollars and then convert those US dollars to Canadian currency and see a decent gain (sometimes over 30%). Secondly, when needed to I could discount my rates to land a deal, knowing that the exchange rate difference would help cover off any discounting I had to do. Now that the exchange rate is par, I have effectively taken a decent pay cut (factored with the price gouging I'm getting killed) and I have to be much more competitive to secure US deals since I can no longer easily undercut the competition.
So where is all this going. First, it's just a rant because I'm ticked off at getting so blatantly price gouged. Second, an at par exchange rate is a huge wake up call for people doing business with American companies. We need to be much more competitive and offer much more than a good price in order to stay in and land deals. Third, the large cost differential means substantially higher costs, so I need to focus even more on being super competitive, pick the right jobs, offer the right services, and keep clients super satisfied.
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Sep 30, 2007 at 6:57 PM
The down trend of US dollar is not going to change for the time being, with their subprime woes, outher currency like aussie and canadian are going to appreciate more in future. Guess you may have more pay cut in future, but who knows, maybe you will have lots of clients from canada in future.
Good luck pal.
Oct 03, 2007 at 8:18 AM
Looks good! Thanks for share this. Adam.
Dec 12, 2007 at 2:55 AM
You think you have it bad? Just try living in the UK... everything costs the same in pounds as it does in dollars, e.g. if you pay $30 for Adobe CS3 Bible then it will be on sale in the bookshops here for £30, effectively double the price! Then we have the fiasco of paying over $2 a litre of petrol and don't even get me started on the cost of housing...
Jan 13, 2008 at 4:49 PM
here within holland we have a problem with the low dollar price. The euro is too strong and we are suffering from that with our export. The import however is quite good. THe iphone was very cheap
regards
Liu
Feb 14, 2008 at 9:10 AM
Yes Liu, but euro doesn't threaten position of dollar.
Obozy Rejsy
Mar 27, 2008 at 4:12 PM
WOWW
For the average joe that likely doesn't mean much until you consider what the average American pays for goods vs what the average Canadian does. A Toyota Prius (20,950 vs. 29,500, 40%), Mac Book Pro 17" (2,799 vs 3,099, 11%), Adobe CS 3 Bible (49.99 vs 59.99, 20%), flight from Buffalo to LA vs flight from Toronto to LA (almost exact same distance) (239.60 vs 1,258.20, 524% ... cough)
that's interesting
Mar 27, 2008 at 4:37 PM
thax man. didn't fnd any thing for write :))
May 26, 2008 at 7:27 PM
I'm completely POed at the blatant gouging. Why why do they think Canadians are stupid?? I wanted to buy an Onkyo stereo receiver and the mark up is 50% over the US price! I hear there's free trade? I hear our dollar is at par? With today's shipping the costs are minimal and anywhere in North America in lets say 3 days depending on supply. I just want to know who to yell at to get things changed anyone know??
Jun 12, 2008 at 2:14 PM
Just ran across this article on a report from BMO regarding the price differential between Canada and the US, ughhh.
Jun 16, 2008 at 8:27 AM
Well you should try living in the UK, we just pay more for everthing due to price fixing
Aug 11, 2008 at 7:24 AM
Yeah, the truth is you've had it good for so long you got used to it. It may be a shock to the system but it's the times we live in unfortunately.
There's plenty of people around the world who are in real financial trouble trying to keep pace with the cost of living.