And it is really just, "charge what the market will bear". Isn't that how all pricing is done?
The other problem for Kobo's pricing in Australia is that the local publisher of the book has a say. When there isn't a local publisher, I don't know what happens.
Having said that, it took me a while to find a book that Kobo is selling at a higher price here than elsewhere. A spot check of books published by Baen, using Google to convert between currencies, the Australian price is slightly better than both the USA and UK prices. Same for the Harry Potter books. Both of these seem to be the same editions. The Jack Reacher books are even more in our favour. And these are different editions fro different publishers. Others work out closer with differences I think that are related to the way that Kobo "round" prices mentioned elsewhere in the article.
When I looked at Stephen King books, the US price is lower. In this case, the publishers and editions are different.
This completely and utterly random and unscientific survey suggests to me that the price here for books from a single worldwide publisher is exchange rate based, but if there is a local publisher, the local publisher is setting the price, or at least influencing it by how much they sell it to Kobo.
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