Why are iPhones so much more expensive in england than america?

I was just browsing around on the Apple site, and I was having a look at the iPhone 5 when I realised that I was on Apple USA site not the UK, and switched to the UK site. The iPhone 5 on the US site said from $199 but when I went on the UK site it said from £529!

That is like $788 dollars! Why the hell is the iPhone 5 (and basically any iPhone model/apple product) so much more expensive in the UK?

199 dollars and 788 dollars is a huge difference.

You were looking at the no contract pricing. The $199 price in the US is only if you sign a 2 year contract. If you buy the phone just retail, it's $599

Taxes and Contract

On the US site they come with a contract to a network and so are subsidised by the network who will charge you more over then next 12-24 months as part of your contract terms. In the UK they are contract free so you can use any provider and they won't charge more than the basic rate for use.

You can also buy them on contract in the UK and the price is similar to the US however it is usually not a good idea and certainly not when the product is new. Phone companies don't actually make much money off phone calls but they make quite a lot from effectively being hire purchase companies for people buying mobile phones.

When the iPhone 5 first came out t-mobile (UK) were asking £65 per month for the contract (paying £200 for the phone initially) on a 24 month contract. The basic contract was £5 per month plus £5 for unlimited 3g internet usage. This meant that you would be paying £1, 200 more for the phone if you bought it through t-mobile over 2 years (taking all your costs into account total bill £1, 760). The phone itself cost a little over £500. Even if you have to use a credit card for the initial purchase it is still a heck of a lot cheaper to buy the phone outright. People who work for phone companies do not use their contracts to get phones because they understand how the phone companies are making their money.

EDIT: It even says on the US website "For qualified customers only" and lists the comapnies you have to take the contract with… AT&T, Sprint, T-Mobile or Verizon. On the UK site you are not tied to any of these contracts. This is not a price difference between the UK/US due to companies disingenuously claiming shipping costs etc, in fact Apple are the subject of price fixing investigations and they work VERY hard to make sure their products cost the same where ever you are so that people do not buy from one country or another in particular.

This is the cost off contract in the US ($749 for 32gb)

http://store.apple.com/...ct=IPHONE5

This is the cost off contract in the UK (£599 for 32gb)

http://store.apple.com/...ly/iphone5

Due to fluctuations in the currency conversion rates it is about $100 or £66 cheaper in the US at the moment but this changes regularly and it is currently because the Pound Sterling is strong against the dollar at £1 for $1.49.

There are five main reasons:

1) Shipping costs.
2) Import duty.
3) V. A.T.
4) Brokerage charges.
5) People over here really are dumb enough to pay ridiculously high prices, just to own something "fashionable" (if they weren't, companies like Apple wouldn't be able to sell them for so much, would they?).

Only with a contract (but thats still a good deal, I don't mind 2 year contracts)

The UK site shows the off contract/unlocked pricing.
The US site shows the on contract pricing.

Unlocked is always more expensive.

Http://www.bbc.co.uk/news/magazine-22868787

That's an interesting article the BBC did about tech being more expensive here, in Britain, than over in the States. It basically says that companies will blame higher taxes and shipping costs, but even with these costs it still cost Way too much to purchase electronic goods here vs the United States. The article concludes with an expert who basically says that because we're wealthier over here, in general, we just tend to put up with it. The simple reason is: because companies can.

Pretty mean, huh?

---EDIT---
Just re-read your question. The above is true, but on the Apple US website, you also take out a 24 month contract, so you only pay the initial price of the iPhone which is $199 but in the UK, you don't take out the contract on the Apple Store website, you have to do that directly with your mobile phone service provider. The Apple Store UK offers a SIM free version of the phone, so you don't pay off the full cost monthly. You can also buy the SIM free model in the US, which, when you do the currency exchange, works out at £100 cheaper in the US than the UK, so what I said above is still true, but you need to use the prices of the SIM-FREE models.