Why is Switzerland so expensive?

Last week Switzerland joined the Cassis de Dijon agreement, which allows products to flow over the border without as many restrictions. This has fed the on-going discussion about cost of living in Switzerland and why products just across the border are sometimes much cheaper. WRS’s Tony Ganzer wanted to find out why products in Switzerland are so expensive, and what the consumer could and should do about it.

We have all been there: whether traveling abroad or short on time at home, fast food is expected to be an option that’s not just fast but cheap too. And many times a meal at a chain restaurant provides a dish our taste buds recognize.

At a typical McDonald’s in Switzerland, for example, a customer might order a medium Big Mac Meal. While this meal would cost maybe 5 euros in Germany, the price in Switzerland is a cool CHF 12,50.

“It’s normal in Switzerland…prices are so high,” says Basel native Michael, outside a group of cafes and restaurants in Bern.

“I mean you earn a little more than other countries but the prices are really, really high,” he says. “I think people in Switzerland want to pay that, if they didn’t want to pay that they wouldn’t pay, but they pay that,”

Michael says eating at a restaurant in Switzerland, fast food or gourmet, will run nearly double the price for similar fare abroad.

A kebab and a coke will run you CHF 13,80 in Geneva.

And it seems high costs are not limited to food–a whole host of goods in Switzerland are pricey.

“If a foreigner comes to a Swiss McDonald’s restaurant well maybe he will be surprised, but he will be surprised if he goes to the cinema, he will be surprised if he goes to any other kind of market, so he really has to get used to it,” says Rhea Beltrami, the supply chain director for McDonald’s Switzerland.

Beltrami says McDonald’s in Switzerland has some 98 million customers a year who think there is a good balance for quality of food and price. Prices seem higher because they are.

“We have different product costs in Switzerland, we have different labor costs. If you rent a building it costs a lot more than if you rent a building in Europe,” she says. “I think our guests they know that, and there is no discussion about our prices.”

“That explains I would say roughly about 50% of the price difference, there we have legal framework, other requirements, wages, rents, etc,” says Stefan Meierhans, the government’s price watchdog.

“The other 50% is really, I think, an increased hunger of a high margin, and the willingness of people and readiness accepting this pricing level,” he says.

Because there is not obvious suffering from high prices in Switzerland, Meierhans says there is no strong backlash from consumers. He points to a study that named Service and Quality the top two priorities for Swiss shoppers.

Price came in third.

“But I also honestly think we have a general problem in too high mark ups and too big a margin, and I honestly think there is a general problem with discriminating basically Swiss consumers, or people buying stuff in Switzerland,” Meierhans says.

Looking for more profit is a natural part of a free market, he adds.

Though Sara Stalder, the president of the Swiss consumer organization, says prices are just too high.

“That is a problem with all international organizations…they have prices that are 10, 20, 50% more than in the other countries and that is not right,” Stalder says, referring to foreign companies doing business in Switzerland.

She says despite import costs the difference in price between the EU and Switzerland is still too great.

Price watchdog Meierhans says consumers need to speak up if they feel prices are too high, either by writing him a letter, or just asking shop owners to pay less.

He also says having consumers and politicians talking about high prices is a good way to combat them, because transparency will help the customer get a fair price, or decide to look for one somewhere else. Like in the EU.

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