Large price differences between EU banks

Brussels, Sept. 24th. In Italy you pay 253 euro’s per year to ‘costs’ for an ordinary bank account. In France is that 154 euro’s, in The Netherlands 46 and in Bulgaria 27. Research done by the European Commission von 224 banks in the European Union shows this. The Commission calls these differences “unacceptable”.

The researchers also conclude that the banks are being vague about the costs. According to the European law, banks must be transparent on the costs of standard services like depreciation and money withdrawals. But in 66 percent of the cases, the researchers had to call the banks because websites gave unclear or incomplete information. With one in ten banks there was even nothing on it. And also by telephone the researchers didn’t receive some data. Some banks only gave oral information about rates and refused to put them on paper. The banks that were investigated represent 81 percent of the market.

The researchers also looked at the rates for specialised services like closing a personal loan. Banks in Italy and Spain are by far the most expensive, followed by France and Austria. The cheapest countries are Bulgaria, The Netherlands, Belgium and Portugal. In the cheapest countries, the banks seemed less vague about the costs.

The report shows that 9 percent of the customers changed banks over the last two years. According to European Consumer Organisation BEUC this number would be higher if there were clearer price lists. The BEUC receives many complaints about unclear pricing and calls it “exploitation”. The Commission wants national banking supervisors to ensure that existing consumer rights are better respected.

Brussel, 24 sept. In Italië betaal je 253 euro per jaar aan ‘kosten’ voor een doodgewone bankrekening. In Frankrijk is dat 154 euro, in Nederland 46 en in Bulgarije 27. Dat blijkt uit onderzoek dat de Europese Commissie heeft laten doen onder 224 banken in de Europese Unie. De Commissie noemt de verschillen „onaanvaardbaar”.

W De onderzoekers concluderen ook dat banken vaag doen over de kosten. Volgens de Europese wetgeving moeten banken transparant zijn over de kosten van standaarddienstverlening als afschrijvingen en geldopnames. Maar in 66 procent van de gevallen moesten de onderzoekers banken bellen omdat websites onduidelijke of onvolledige informatie gaven. Bij één op de tien banken stond er zelfs niets op. En ook telefonisch kregen de onderzoekers bepaalde gegevens niet. Sommige banken gaven alleen mondeling informatie over tarieven en weigerden die op papier te zetten. De onderzochte banken vertegenwoordigen 81 procent van de markt.

De onderzoekers bekeken ook tarieven voor gespecialiseerder diensten als het afsluiten van een persoonlijke lening. Banken in Italië en Spanje zijn verreweg het duurst, gevolgd door Frankrijk en Oostenrijk. De goedkoopste landen zijn Bulgarije, Nederland, België en Portugal. In goedkopere landen bleken banken minder vaag over de kosten.

Uit het rapport blijkt dat 9 procent van de klanten de afgelopen twee jaar van bank wisselde. Volgens de Europese consumentenorganisatie BEUC zou dit aantal hoger zijn als er heldere prijslijsten waren. De BEUC krijgt veel klachten over onduidelijke prijsbeleid, en noemt het „uitbuiting”. De Commissie wil nationale banktoezichthouders vragen er op te letten dat bestaande consumentenrechten beter worden nageleefd.

Starbucks’ New Pricing Strategy: The Beginning of the End?

Starbucks recently announced a revamped pricing structure. Prices for many of its popular (read: lower-end) products such as brewed coffees and lattes are headed downwards. A spokesperson claims that this is the first time in Starbucks’ history that prices have been reduced. According to an article written by Claire Cain Miller in the New York Times, the coffee purveyor is also redesigning its menu to feature lower priced brewed coffees, as well as offering promotions on iced drinks. This strategy makes sense: the struggling economy dictates discounts and McDonald’s brewed coffees and lattes are stealing price sensitive customers.

Paradoxically, Starbucks is also increasing the prices of its higher-end more complex drinks including Frappuccinos and caramel macchiatos, of which there is less competition from rivals. In some cases, prices are rising by 30 cents (8%). There is some justification for this price increase. In Starbucks recent quarterly earnings release (third quarter ending June 28), same store sales in the U.S. were down by 6%. Broken down, 4% of this decline was due to fewer transactions (customers defecting to McDonald’s, for instance) and the remaining 2% from a decrease in average value per transaction. Thus, for the most part, customers who continued to patronize Starbucks spent the same amount on each visit.

So why raise prices right now when demand is waning? Some speculate that Starbucks is trying to make the most profit from its devoted customers who are hooked on its products. In other words, its specialty drinks are in the cash cow phase of the Boston Consulting Group’s Growth Share Matrix. For products in this cash cow phase, the general recommendation is to reduce investments and simply harvest profits from current demand. All successful products have their heyday of strong growth and then eventually reach a point where demand remains constant or decreases. After all, remember when CB radios and radar detectors were the rage? When a product reaches the cash cow stage of its lifecycle, the general strategy is to take the money and run. What are the chances that macchiatos will experience a growth surge in the future?

With rivals (including McDonald’s and Dunkin Donuts) stealing share from Starbucks’ lower-end products and concerns about the growth of its highly differentiated premium coffee drinks, what’s the growth driver that justifies Starbucks’ current price to earnings ratio of 59? This high p/e ratio indicates that investors feel the company has higher potential growth opportunities than the average company (in contrast, GE’s p/e ratio is 10.5 and Wal-Mart’s is 15).

A company’s pricing strategy can be a good indicator of its future growth potential