Ruminations of an Expatriate

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Sunday, December 2nd, 2007...2:28 am


Comparing Prices

I have often heard and read gringos asserting that electronic equipment is very much more expensive here Mexico than it is in the USA. A sentiment of which I have been skeptical.

Those asserting such, I think, don’t keep in mind that when comparing the costs of items here to the cost in the USA that the prices here include the 15% VAT. A Value Added Tax, for those who don’t know, is similar to a sales tax; but, as I understand, is imposed upon every transaction involving a particular good.

I have today configured identical Dell XPS M1330 notebooks on the Mexican and USA Dell websites. The cost of the Mexican unit, with the VAT removed and using today’s exchange rate of $10.89, comes to the equivalent of $1,138. USA. The USA unit is $1,149.

Individuals here do not pay income tax, but are taxed through the VAT. So I think to fairly compare prices one should discount the VAT, as those in the USA (if they’re honest and aren’t Boeing and ilk)  have already paid taxes on the money for which they are paying for the Dell.

Admittedly I haven’t done detailed comparisons, just that I did today; but intuitively, with the 15% VAT discount, the prices of electronic things and appliances here and  in the USA seem to be in the ball park.

It is my conclusion, incidentally, that electronic things are cheaper in the mom and pop types stores in Centro than they are in the “big box” mall stores. The best deals on electronic goods, however, may be found through Mercado Libre, I believe.

Vehicles seem to be cheaper here, as well as leather goods, clothing in general, and a whole bunch of other things which don’t presently come to mind. Real estate, however, is expensive.

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5 Comments

Filed under Electronics Prices, Mexico, USA

5 Comments

  • Andee
    December 2nd, 2007 at 9:29 am

    I have been living in Mexico about 4 years. So I don’t know the current prices of things in the U.S. But I keep being amazed at the low prices for some items.

    I just purchased a crimper tool for joining the little connectors that go on the ends of a piece of phone line. At an amazing little electronics shop where you are not allowed inside. You stand at the window and discuss your needs and the guys goes and finds the stuff for you.

    I wanted to to attach the little connectors that snap into the box where the phone line comes into the house, and also into the back of modems, etc. It was $40mx, $3.60US.And included two attachments for crimping the phone into into two different size connecters. They also has a professional model (stronger looking) for $80mx.

    I often buy extension cords and light bulb attachments. As gifts for people with terrible lighting in their home. So the kids can study at night. Or so there’s a light at night in the toilet area.

    The 5 meter cord is usually 15mx/$1.35us and the the socket you screw the bulb into is usually $10mx. So $25mx/$2.35us, for a nice little light to plug into the wall and hang from the ceiling.

    Those are the prices at the little hardware places around the 12,000 person town near where I live. Or at the street markets. At the Walmart, two hours away, the same stuff, in plastic packing is about $4.75us. For whatever it’s worth.

    Last year I bought a cheap printer at the P.V. Office Depot, and an extra cartridge. And then looked at the US Office Depot ad on line. Same price, not including the IVA.

  • Gringo Loco
    December 2nd, 2007 at 9:38 am

    Hey Andee,

    Thanks for your perspective.

    Though my conclusions are based upon decidedly unscientific methods, I think I bit much is made of lower costs of living here.

    Labor is certainly much less expensive, so construction, and such things, are much less expensive.

  • 1st Mate
    December 4th, 2007 at 10:52 am

    We live only four hours from the border, in Sonora, but by the time you factor in the gas, tolls, etc for a trip up there, very few items are more expensive down here. I find new clothing is often costlier in the big stores, but I prefer tianguis for clothes anyway. Food is a good deal, if you don’t insist on US brands. Again, tianguis is great for produce. My dream is to get to the point where we don’t need to go to the States at all…then we can move further south and cut the US umbilical cord for good.Then maybe we can find some still-reasonable real estate.

  • Gringo Loco
    December 4th, 2007 at 11:28 am

    Hey 1st Mate,

    Thanks for your perspective.

    Having navigated USA airport security this past September I am not at all anxious to return.

  • Theresa in Merida
    December 6th, 2007 at 8:51 am

    Hi! I was just about to blog about prices etc, so I appreciate your perpective. I feel that electronics are more expensive because of the IVA , which I have to pay, I still paid income tax on my USA money so that isn’t a wash at all, I get double dinged!
    Things made in Mexico are cheaper, unless they have been re-imported, labour is cheaper, property is certainly cheaper, and food is about 30 to 50% cheaper than Northern California.
    But you can live just as cheaply NOB if you are careful, housing is certainly cheaper than NorCal in most of the mid-west, if you grow your own food and take advantage of sales, food can be less expensive, I have always bought 2nd hand goods and they are cheaper and sometimes of better quality than what is available here new. The 2 places where Mexico beats NOB is in lower labour prices and medical costs. Of course, your chosen lifestyle really makes a difference!
    regards,
    Theresa

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