10 June, 2014

Prices at Home and Abroad

The difference in prices between Germany and America is something I noticed as soon as I arrived here, but I somehow managed to neglect writing a post about it until now. For Americans who have never been to Germany, and Germans who have never been to America, what is your guess about the difference in prices: do you think everyday things are more expensive in Germany, or less?

If you guessed more expensive in Germany, you're wrong. Many everyday necessities, such as shampoo/body wash/toothpaste etc, cell phone plans and food are cheaper in Germany, sometimes astoundingly so. I'll show some examples of what I mean.

I'll start with the most basic:

Food

I didn't realize how expensive food is in the United States, especially fresh, healthy food, until I visited a German supermarket. The produce in Germany is so affordable it's almost impossible not to eat healthy. Other basics are also cheap, such as milk and other dairy products, eggs, rice, etc. I've developed an even greater awareness of prices since I am responsible for shopping for myself for two weeks while my host family is on vacation. As an example, I'll quote some prices on my receipts from the last few days:

3 tomatoes: 85 cents
Bag of plain oats: 39 cents
2 blocks of organic tofu: 1.79
Packet of sliced turkey breast: 99 cents
Packet of sliced chicken breast: 99 cents
Small ball of fresh mozzarella: 55 cents
Pack of 6 tortillas: 1.19
Liter of whole milk: 69 cents
Large container of yogurt (2-3 servings): 95 cents
Bag of tortilla chips: 79 cents
750 grams of carrots: 1.49
Pack of cream cheese: 66 cents

The most expensive things I bought were a packet of organic sliced goat cheese (2.99), a pack of 5 sausages (2.79) and a small bag of organic quinoa (3.49).

(Also, this isn't food, but you can get bottles of shampoo, conditioner and body wash for 65 cents [88 cents USD] each.)

These differences are possibly in part the result of differences in the market and differing supply and demand, but more likely they are the direct result of differences in public policy. The food industry in Germany is, as far as I know, subsidized much more heavily by the government than it is in the United States, with the goal that everyone should be able to afford good food and not just McDonalds (which is one of the only foods that's cheaper in the United States than in Europe).

Internet, TV and Phone

Another price difference that is particularly mind-boggling (as if the food examples weren't enough) is the drastic difference in price for communication and media services like cell phone service, internet and TV. I'm really not sure how it's gotten this bad, but America really needs to get its sh*t together. Here is an example to demonstrate what I mean:

When I moved to Germany, instead of opting for some cheap flip phone like I did in Spain, I continued using my iPhone. In America, cell service for a single iPhone with one of the main providers (Verizon, Sprint, AT&T) starts at around $45 per month, unless you get a pay-as-you-go plan and don't use your phone much. Even with budget providers like Ting mobile, the amount that I use my phone would cost me around $24 a month. In comparison, my month-by-month plan (no two-year contract) in Germany costs me 7.99 euros ($10.90) per month. That gives me more than enough minutes and texting (I get 300 "units" which can be used for either a minute of calling or a text) and 300mb of data, which is just about what I use in an average month. AND if I go over my data "limit" I don't get charged more, the data speed just slows down. I had to pay for the SIM card upfront, which increased the cost for the first month, but even that only cost 13 euros, which included 10 euros already loaded onto the SIM card. And I even benefitted from one of the great things about shopping in Europe: tax was already included in the sticker price. And since I don't have a contract I don't have to worry about any early termination fees.

Let's really put this difference in perspective. At the end of one year, I will have paid 108.88 euros ($147.42) for phone service. Someone with a basic contract in the US will pay $540 in the same time period, plus activation fees, plus possible early termination fees, PLUS TAX! There are premium, everything-included plans from Sprint that cost almost the same for one phone for one month as I will pay for an entire year. Something is terribly wrong here.

This isn't to say that what I pay is what everyone in Germany pays. I have a particularly cheap plan, since I took the cheapest deal that was presented to me. I know other people who pay 19-20 euros (~$25-$27) a month, and I think unlimited everything (talk, text and data) costs around 30 euros (~$41) a month. And the difference in price does not reflect a difference in quality. The cell service and coverage in Germany is comparable to most places I've been in the United States, and in some places the German service is better.

The price differences don't stop at cell phones. The same applies to internet and TV. I don't pay for my own internet or TV service so I can't give my own personal example, but I asked Maxim what he pays and he said internet for his apartment is around 25 euros (~$34) per month, the cost of which is shared among three people. In comparison, my mom pays $68 per month for internet, although that also includes a VoIP phone line. The only difference that might perhaps favor the American approach is that each German household is required to pay a monthly fee for the public TV service that's offered throughout Germany. I think you may get it waived if you can prove that you don't own a TV, but this might just be rumor. That being said, I don't even want to know how much cable prices have gotten up to in the US. I'm sure if you have a huge selection of channels it's in the several hundred dollar per month range.

Clothing

However, not everything is cheaper in Germany. One thing stands out as cheaper in the US, and that's clothing. There are still cheaper clothing stores here like TJMaxx (although it's called TKMaxx here) and the ever-popular Primark (cheap, crappy clothing from an Irish company), but generally if you want decent quality you have to pay handsomely for it. I've done limited shopping since I've been here and I've always bought things that were either on sale or were just slightly more than I wanted to pay. It's not unusual to see a simple T-shirt for 20 euros ($27) and find jeans starting at 60 euros ($81). Shoes are not exempt from this. I recently bought sneakers for 60 euros (again, $81).

I could go into much more detail about prices for other categories too, but I think this gives a good introduction. To summarize, day-to-day expenses tend to be less expensive in Germany, which is fortunate for me since I don't have anywhere near a decent income. But at these prices, even with my meager living allowance, I still manage to buy both necessities and little fun extras every so often.

5 comments :

  1. H&M is where I shop for basics--the quality is pretty poor, but if you just need underwear, tank tops, or socks, its a good place to go. It really seems like there is no in-between here, though. You can either have crap quality or pay $80 for a pair of pants. There doesn't seem to be a "slightly higher quality but not name brand" line.

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  2. interesting article. We're moving from Australia to Leipzig, Germany next month and the biggest expense for us is private health insurance (we're self employed freelancers). How did you go with health insurance? In Australia we have a universal health system so private health insurance is optional. We buy most of our clothes online from the UK anyway so it'll mean cheaper postage for us. Food looks definitely cheaper (we find food consistently cheaper in Europe and UK except for wine. Like a Euro for a punnet of blueberries-here you'd pay $6). Can't wait!

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    1. Good luck on the move to Leipzig! My health insurance situation is not typical: since I'm an au pair and not eligible for the public health insurance, my host family pays for private au pair insurance for me. This covers health emergencies and acute health conditions that are not pre-existing, plus some other things like travel and liability insurances. Depending on the kind of visa you have, you may be eligible for the public health system. I don't know very much about this, but you can try this article as a start: http://www.toytowngermany.com/wiki/Health_insurance. The link is to a website that I like to use that includes extensive forums for English-speakers living in Germany. I'm sure you will find much more information on this website than I can provide. Once again, good luck with everything, and welcome to Germany!

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    1. You're welcome! Feel free to message me with any other questions, I'll do my best to answer them or at least point you in the right direction.

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