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Why are Nvidia RTX 30 series cards so expensive in South Africa?

The Nvidia RTX 30 series is upon us. What a time to be a gamer or a hardware enthusiast! These cards are leaps and bounds ahead of the previous RTX 20 series cards, even the monstrous performance of the 2080 Ti cards. A new era is clearly upon us, and just in time too! Cyberpunk 2077 and a few other AAA titles will be coming out shortly to test our PCs to the maximum.

Now it may sound contrarian, but is it actually worth waiting before pouncing upon any RTX 30 card you can get your hands on? Our South African market offers some interesting nuances that you should take into account before making any rash purchases. Let's have a look at some of the things you should be thinking about before snapping up a new 3070, 3080 or 3090 card.

Value for money


First, it goes without saying that these new cards offer incredible value. We define value as performance divided by price. These cards have been shown to absolutely demolish the benchmarks set by the previous generation of cards, and, almost unbelievably, they're actually cheaper! The RTX 3070 recommended retail price was set at a mere $499, yet rivals the 2080 Ti's performance which comes (or rather used to come) at a premium price of $1,299. Scary indeed. The next tier higher 3080 has a recommended price of $699, while the 3090 premier series will be $1,499.

Whilst these cards are clearly incredible value for money in terms of the reference markets (being USA and Europe primarily), does that value carry over to our nation all the way out here in Africa? Based on some preliminary numbers, it does not appear so. The prices being reflected on most reseller sites are averaging significantly higher than a simple USDZAR converted rate. So whilst gamers are celebrating in developed countries, we seem to have minimal cause to celebrate here. Why is this?

Why the discrepancy?


There are many factors at play here. First off is the most obvious one - the exchange rate.

Exchange rate

Given that the launch of these cards was announced a few weeks prior to launch, for any local suppliers to price these cards, they'd have to take into account a fair degree of uncertainty around the eventual spot rate that will apply when stock would finally end up on our shores. Now if anyone knows the USDZAR exchange rate, it's not exactly known as a safe haven currency pair to invest in. The volatility on this rate is bad enough under the most benign of conditions, but in this topsy turvy outlier of a year, forecasting of forward rates is tougher than ever. This would certainly have had a significant impact on the local price, with buffers built in to cushion any large swings in the exchange rate.


Here at Tekku, we're not just tech experts, we also have our fair share of financial market knowledge and experience. There are ways to hedge these risks and guarantee the final price at which the cards would be received, but this is unlikely to be the practise amongst local suppliers.

Shipping

These cards don't just magically appear in our shops, and they aren't produced locally. So how do we get them? Via importing of course. Importing products from overseas adds extra costs onto the retail price that you wouldn't see in developed markets. The largest of these is the actual cost of shipping the product. The products are generally delivered via freight ships. This adds a fair amount to the cost that would not be applicable if you lived in the USA for instance. These are unavoidable costs, and cannot be hedged. Add to that the fact that these costs are also in USD, and you'll find all the problems associated with the exchange rate rearing their ugly heads once again.


Taxes

Next comes our friend, the tax man. There are two charges that are usually leviable on imports.


One of these is a customs duty. Customs duties can range broadly depending on the product type. Interestingly, computer equipment as defined has a customs charge of 0%. So this is not driving any additional charge in this case.

The other charge is very much a contributor to the inflated price. This is value-added tax, or VAT. Our current VAT rate is 15%. This is a significant increase in the input price and is of course tacked onto the eventual selling price to recover this cost, as far as the supplier is concerned of course. Either way, that's a straight 15% (minimum) added to the "clean" retail price you'd seen advertised overseas. Makes a difference, right?

Scarcity

The law of supply and demand. Any economist worth their salt knows this. The more you have of something, the less you can charge for it, and of course, the more scarce something is, the higher the premium you can charge on it. Think gold!

These RTX 30 cards suffered an embarrassing launch where the shortage of cards was made especially apparent. What does this mean for us in South Africa? Less cards available for us, and a higher price.

What does it mean for the timing of your purchase? If you wait a bit until the supply is replenished and bountiful, it is inevitable that prices will normalize and drop somewhat.



The impact of rival cards

AMD isn't sitting on their laurels whilst Nvidia takes the market by storm. They too are creating a new series of cards, known as Big Navi. These cards may or may not be on par with the Nvidia cards, but either way, competition is good for end consumers. In the event that these cards deliver awesome performance and rival the Nvidia counterparts, we would certainly see prices come down to keep the cards competitive. However, at this point, there are no AMD cards to compare to, and as such the RTX 30 cards rule the roost and can retain any premium in the market.

It makes it worth considering though that once the AMD cards launch, we could see a drop in prices, which would carry over to our South African market too, of course.


Conclusion


So again, one has to think - is it perhaps worth waiting? The choice is yours friend. We've got you either way, so if you just can't wait, let us know and we'll hook you up with a card in no time!

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