Work Abroad but earn in USD

Monday, June 13, 2005

Argentina & "Dual" Pricing

It's been brought up recently that a dual pricing system exists here -- one set of prices for locals and another set for "extranjeros" (or foreigners). I already described what happened when I was looking at properties and have a look here at this reader's comment.

Reader's Comment

I have already experienced the discrimination and I'm not even there yet. I am going to be staying in a homestay in a few weeks and the university gives students the names of places, their prices, and contact information. The university listed one host family as 650 pesos per month. I e-mailed him... he quoted me roughly $600 U.S. per month. I told him I wasn't interested and he has kept e-mailing me, changing the price. Now it stands at U.S $300 per month [which] is very reasonable, but who wants to live with someone like that?

It's Not Just Individuals, Large Corporations Do It Too

I'd like to point out that in addition to individuals trying to extract the most money possible from foreigners, the practice extends to major corporations as well. I recently learned that Aerolineas Argentinas and many of the major hotels practice the same exact thing. They don't even make an attempt to hide it. Just check out their website. The very first page asks you to select your "residence country." Watch this...

I clicked Argentina and then scheduled a hypothetical trip from Buenos Aires to Iguazu Falls. I scheduled it for 1 month from today for a 3 night stay. I went ahead and performed the same exact itinerary using the same flights, times, and class of service. The only change I made was to select United States as my country of residence. The result? See for yourself:

  • Argentina Price: $205 USD
  • U.S. Price: $490 USD

In fairness to Argentina, I should point out that they are hardly alone with this attitude. Fleecing tourists, especially gringo tourists, is something of a sport all over the world. Nevertheless, as Americans, we should be aware that it is happening and stand-up and refuse to give our business to people who behave this way.

Tiered Pricing

I should also point out that tiered pricing is something that probably originated in the United States. You can buy the same sweater in Old Navy that you can in Banana Republic. They're both made in the same Asian textile factory and they probably have very similar levels of quality. The difference is that if you buy it in Banana Republic, you'll pay twice the price because that store is targeting upper-income people.

The software industry does the same thing. Students can buy a piece of software in the university bookstore that costs one-third the price as what businesses pay. The software companies do this because they want to sell their software at the optimal price. Businesses are willing to pay more so they get charged more. Price a piece of software too high and students can't afford it. Thus, you get "Academic Editions." The only difference is the little "Academic Edition" sticker they slap on the box.

As a former college student, I used to buy my college textbooks from Amazon.co.uk and have them shipped to the U.S. The United Kingdom prices were sometimes half or even one-third of what Americans paid. Why? Americans are willing to put up with the high prices. In the UK, they're not. So, we get overcharged. The pharmaceutical companies do the exact same thing.

So, before we get all high and mighty about people trying to charge us more, let's just remember that our own companies are doing it to us as well. I can buy Pfizer pills in Argentina and Houghton Mifflin textbooks in the UK for a lot less than I can in the United States. These are U.S. companies that are pursuing the same strategy -- charge the Americans more. So, let's not only blame Argentina for this.

Our New Globalized World

Remember, anytime there is price discrimination like this, we can always just take our business elsewhere or use arbitrage to get around it. In a globally-connected world, its harder to maintain artificial price barriers like this. Local prices too high, then ship your products in from abroad. Don't want to pay Aerolineas Argentinas high prices? Get your Argentina DNI. I can get local prices here now that I have my residency visa. I bring my own electronics because I don't want to pay the high prices for them here.

Hell, if you think you're getting cheated on a homestay, then call me up and I'll get one of my Argentine friends to call a place on your behalf, speak in Spanish with the family, and get a fair rate. I'd like to see someone try to quote $600 USD to another Argentine. Look at that -- through the power of globalization you can use an e-mail and a phone call defeat a price barrier such as this.

Remember, globalization doesn't just bring benefits to multinational corporations, it does the same for individuals as well. As a global individual, you have an enormous amount of choice. If you don't like how this guy is treating you, don't stay in his apartment. When you arrive here, if you don't like how the university is treating you, pick a new one. Finally, if you don't like Argentina, find a different country to study. You have all the power here, so by all means, use it.

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10 Comments:

Anonymous Anonymous said...

Please note that Aerolineas Argentinas is a Spanish owned company. They are not charging different prices, per se, but only selling the unrestricted fare to foreigners, whereas, Argentinians can buy the restricted fare tickets. Those tickets do provide different benefits, however, it would be nice if the airline sold the restricted fares to foreigners, as well.

6/13/2005 11:33:00 AM  
Anonymous Anonymous said...

I don't care who the company is owned by. It sounds like they are running a shady business and I will definately make it a point to avoid that company.

6/13/2005 01:59:00 PM  
Anonymous Joseph G. said...

I appreciate the offer but I have found another place to live.
I never considered living there for $600, I would live in a hostel way before that or even a hotel.
I like this topic.
Do you know if I can get the unrestricted airfare on Aerolineas if I have a year-long student visa?
It would be hard to avoid them, as I understand they are the main carrier of Argentina.
Thanks

6/15/2005 01:37:00 PM  
Anonymous Dean said...

There is always LAN Chile. As of today, Aerolineas airline has the best fares from Miami. (The reason being, might be because they were bought out by LAN Chile.)
With a nonstop flight the fare is much less than Lan Chile (one-stop) or American Airlines (non-stop).
Check out Orbitz for flight info. That's the best prices I could find for a return trip in November.

6/18/2005 07:35:00 AM  
Blogger horace2005 said...

This comment has been removed by a blog administrator.

7/03/2005 10:45:00 PM  
Blogger horace2005 said...

Your "tiered pricing" defense of the local custom of charging more to Americans and Europeans makes no sense. Stores in the US do not single people out by nationality so that they can charge more. Why not charge by race? What's the difference. It is a corrupt practice and should be challenged in the Argentine court system. I find it perverse that foreigners living here often look for justifications for what is clearly wrong - practices that they would never defend in their own countries.

7/03/2005 10:54:00 PM  
Blogger David Richard Despain said...

What's the big deal? You see dual pricing in just about any tourist city in the United States.

In Hawaii, residents have discounts on everything. In some US cities, like Moab, UT, they even give cards to residents so they can buy groceries cheaper.

So why should Argentina be any different. To go to an opera in Buenos Aires it costs triple if you're from out of country. But if they always charged triple, all they would have is foreigners in the opera house and no one else.

11/23/2005 07:40:00 PM  
Anonymous Anonymous said...

Dear El Expatriado: You offer to have someone make a call to help in rental negotiations. You say
"Hell, if you think you're getting cheated on a homestay, then call me up and I'll get one of my Argentine friends to call a place on your behalf". I would like help in trenting a place as I don't speak Spanish. Please give me a way to get in touch.

Thanks,
John
big_landshark@yahoo.com

5/07/2008 01:41:00 AM  
Anonymous Anonymous said...

"Stores in the US do not single people out by nationality"
Wow, that's funny...
In the US they won't even let you IN the country because of your nationality...

8/25/2008 03:45:00 PM  
Anonymous Anonymous said...

to the last anon poster...

your comment is beyond uneducated, you must know these controls are everywhere, which makes me think your comment was stupid & just a weak insult at the US.

please name me any country in the world that has entirely porous borders that allows anyone in regardless of where they come from? keep thinking, it will take a while... Border controls & immigration laws are universal in our era, Argentina has them to keep out X people who want in, and the US & every other country has the same limiting laws too.

To keep it on point though, and not make up some tangential argument just to insult the US... In the US our airlines dont charge tourists from outside the country more than tourists from within the country when booking flights, that is a phenomena of the monopolistic Argentina airlines who do it because they can, and because the lower prices is all Argentine nationals can afford.

8/25/2008 11:04:00 PM  

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