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