Tag Archives: prices

Are prices in Canada higher than in the United States?

I’ve noticed that many prices seem to be lower here in the United States than in Canada. Am I imagining it? With the help of my Canadian friend Annette (an experienced shopper), I decided to find out.

Methodology

I selected a basket of 20 common retail items (food, alcoholic beverages, and fuel), and compared the prices for these items in Vancouver, Canada (my home) and San Antonio, Texas (my location when this crazy idea struck me). Annette and I gathered regular retail prices (not sale prices) not including sales taxes from comparable retail outlets (to the extent that they are available in both cities) within a few days of each other. The American prices were converted to Canadian dollars at the current exchange rate. Where quantities or package sizes differed, the prices were adjusted to equivalent volumes.

Findings

The table below shows the items we checked, the U.S. price, the Canadian price, and the percentage difference of the Canadian price compared to the U.S. price.

Product U.S. Canada Percnt
Frosted Flakes (760g box) $3.92 $7.23 84.6%
Cheerios (396g box) $2.90 $5.02 73.3%
Milk (3.78L = 1 gallon) $4.32 $4.56 5.4%
Eggs (12 Large Grade A) $1.71 $2.63 53.5%
Coors Light beer (24×355 ml cans) $20.39 $43.99 115.7%
Corona Extra beer (12 x 330 ml bottles) $13.25 $25.69 93.9%
Yellowtail Cabernet Sauvignon (750 ml bottle, Australia) $5.07 $12.99 156.2%
Woodbridge Merlot (750 ml bottle, California) $8.64 $13.99 61.9%
Coca Cola (12 cans) $3.04 $5.97 96.4%
Coca Cola (2 Litre bottle) $1.41 $1.87 32.9%
Chicken thighs skin-on, bone in (per pound) $5.04 $4.98 -1.2%
Ground beef (85% lean, per pound) $3.25 $6.28 93.0%
Ground beef (89% lean, per pound) $3.79 $7.98 110.3%
Ground beef (93% lean, per pound) $5.08 $9.88 94.5%
Bananas (per pound) $0.49 $0.58 18.5%
Fuji Apples (per pound) $1.70 $1.19 -30.1%
Yellow Onions, medium (per pound) $2.43 $1.28 -47.3%
Russet Potatoes (per pound) $0.90 $0.48 -46.5%
Gasoline (regular, per Litre) $0.91 $1.34 47.9%
Diesel fuel (per Litre) $1.01 $1.41 39.4%

Analysis

Vancouverites are paying a lot more!

Of the 20 items on the list, 16 were more expensive in Canada. 3 produce items were significantly cheaper in Canada (apples, onions, & potatoes), and there was a trivial difference in the price of chicken thighs. All other items were between 5% and 156% more expensive in Canada.

The price differences were the biggest for wine and beer (61% to 156% higher). The probable reasons for this are: a government monopoly on alcohol distribution in British Columbia, high government taxes on alcoholic beverages, and restrictions and tariffs on importing alcohol into Canada.

Grocery items (other than the few that were cheaper) were between 5% (milk) and 110% (ground beef) more expensive in Vancouver, with the remaining 9 items between 18% (bananas) and 96% (Coca Cola) more expensive.

Vehicle fuel was priced 47% higher in Canada for regular gasoline and 38% higher for diesel fuel. This is due, in part, to higher taxes.

I recognize that this was a very limited sample size (20 items, 2 stores, 2 cities, none of which were randomly chosen), and so few general conclusions can be drawn from these results. But it does confirm my suspicions. In my experience, groceries, alcohol, and fuel are consistently more expensive in Canada than in the United States.

Why is this the case? What can Canadian consumers do about it? Stayed tuned for more on this topic.

Flying à la carte with Wizz Air

We flew from Budapest to Barcelona return on Hungary’s discount airline Wizz Air.  I think the name was meant to conjure images of speed but I can’t help thinking of urination when I hear it.  With the bankruptcy of Malev Hungarian Airlines in February 2012 (after 66 years of continuous operation), Wizz Air is now the leading airline and flag carrier of Hungary.  Officially, it’s a 2 star airline (that’s 1 star less than Air Canada whose service Canadians love to complain about) and it hasn’t made a profit since it began operations in 2004.

Hot pink, purple, and white plane flying through purple clouds

Wizz Air Plane

Wizz Air follows the ‘everything is extra’ business model, similar to Ryanair in Europe or Southwest Airlines in the United States.  This means that, in return for your hard-earned money, you are entitled to board an airplane to your destination with 1 carry-on bag.  And that’s it.  Everything else is extra.  And I mean everything.

Booking Fee — Want to use a credit card to pay for your flight? It’s $12 per flight per passenger or $48 for two people on a return trip.  Debit card is only slightly cheaper, so these fees are unavoidable.  How, when I pay for my booking once (for all flights and passengers), can they justify levying the fee per flight and per passenger?

Call Centre Fee – Want to book your flight over the phone rather than using their web site?  $15 per flight per passenger.  That’s $60 for two people on a return trip.

Airport Check-in Fee – If you want to check-in at the airport rather than online (or if you’re forced to because you don’t have access to a printer), it’ll cost you.  $10 per flight per passenger ($40 for a couple return).

Flex Fee – Think you might want to change your flight, but not sure?  You can avoid the Flight Change Fee later if you pay an extra $15 at the time of your original booking.  Basically you’re paying a fee to buy insurance to avoid potentially having to pay another fee.  It’s brilliant!

Name Change Fee  — If you make a mistake on the spelling of your name (which for security reasons can prevent you from getting on the flight), it’s $60 per flight per passenger to change it ($120 return).  But you’d better do it on their website.  It’s $90 per flight per passenger ($180 for a return ticket) if you do it at the airport.  Ouch!

Xpress Priority Boarding Fee – Wizz Air does not normally assign seats, so how early you board can mean the difference between sitting with your traveling companions or not.  People start lining up at the boarding gate immediately after they clear security.  Want to board early?  $6 per flight per passenger ($24 for a couple on a return flight).  $12 per flight per passenger if you change your mind and decide to skip the line at the airport.

XXLong Extra Legroom Fee – If you’re over 5’10”, the small and close seats on Wizz Air won’t do for you.  If you want to sit in an exit row for the extra leg room it’s $12 per person per flight ($48 for a couple return).  You still don’t get an assigned seat though, just a seat somewhere in the exit rows.

Food and Drink – Nothing is included, but a fine selection can be purchased on the plane for a fee.  I wonder if they charge for water?

Cancellation Fee – You can cancel your flight for a fee of $90, but none of their many extra fees are refundable, so you’re not likely to get any money back.

These fees are in addition to more common fees like Baggage Fees and Flight Change Fees.  Wizz Air has these too.  In fact, the fees mentioned above are just a sample of the 62 different fees that Wizz Air has listed on their web site!

If you have a question about any of these fees or the service you’ve received, you can of course telephone Wizz Air’s customer service center.  Calls to customer service cost $1.50 per minute for you to talk to someone in India.  They probably earn $1.50 per hour.  All calls are charged, and complaints must be made by email.

Do I sound bitter?  I’m not.  More fascinated by the business model.  Wizz Air competes in an ultracompetitive marketplace where consumers are attracted by low base ticket prices.  I know that I’ve been excited in the past by advertisements for flights or cruises with what appear to be low prices, only to learn that when all taxes and fees are included the total price is double or even triple.  When people search for flights online, the lowest airfares are typically displayed first.  Consumers very often choose the flights with the lowest base price.  It’s only after they’re invested in the reservation process that they learn of the extra fees.  Admittedly some of these fees are optional for some people, but some are impossible to avoid (i.e. booking fees) effectively resulting in a higher price than advertised.

With base ticket prices so low, Wizz Air has to make most of its money in fees.  They’re like contractors who underbid with the expectation of making their profit through change orders once they’ve got the work, or like steak houses that charge extra for the baked potato and for the vegetables.  And they’re not alone.  We took a flight from Frankfurt, Germany to Vienna, Austria on Berlin Air last September.  The base ticket price for this one-way, 1 hour flight was only $11 (can you believe it?), but with taxes and fees it grew to over $100.

We made the choice to fly Wizz Air despite all the extra charges.  Even though we paid the Booking Fee, the Xpress Priority Boarding Fee, and the XXLong Extra Legroom Fee, our total price was still half that of the next cheapest competitor.  With such low prices, we were worried that they would cut corners somewhere else (e.g. poor service, old planes, etc.) but the experience wasn’t any different than we’ve had with other small airlines.  Just fine for a short flight, and all flights in Europe are short flights.

Will this excessive level of extra charging be coming to North American soon?  Many discount carriers already charge fees for services that are free (or were once free) on other airlines.  I hope that it doesn’t get to this extreme, but the same basic business model applies, so I don’t see any reason why it can’t or won’t.  Hopefully consumers will stay focused on the total price and service and won’t be overly mesmerized by a low base price.

Note — I used an exchange rate of $1.50 per Euro to keep the price conversions simple.