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So as all or at least most of the UK based Dakkites and I'm sure many others from out side the UK will know that as of the 4th of January this year the rate of VAT in the UK increased from 17.5% to 20%. As most other people I have accepted this as a fact of life and will carry on regardless. Now the point I wanted to discuss here is the way in which GW have implemented this with regard to their pricing the following is a link to the statement from the GW website about the increase http://www.games-workshop.com/gws/content/article.jsp?aId=14600002a to me this means prices will be increased to reflect the increase in VAT which is obviously correct. So yesterday I was browsing the site looking to see how the prices of carry cases had gone up as I need a new one for the new army I'm working on and I spotted that the monster case had gone up to £51.25 from £50.00 not a huge increase I know but when I thought about it that's an increase of 2.5% on the original price of £50.00 which already included 17.5% VAT so I took a look at the other cases and several other products and the same was true there.

So what does this mean ? Well from what I can see GW have increased prices by 2.5% (in some cases a tiny bit more ) across their range which already included 17.5% VAT instead of applying a 20% increase to prices before the original 17.5% had been applied. This to my mind is wrong. Now I'm no mathematics genius or business expert so I could just be way off the mark here so please correct me if I'm wrong. Also I appreciate we are only talking £1 or £2 in most cases which won't stop me buying their products and I'm sure they aren't the only company to have made price increases in this way I just wondered what other people thought about this having seen GW apply a price increase of 2 - 5% across most of their range in the last few months in addition to this increase.

You're right - a VAT increase from 17.5% to 20% is a 2.13% increase on the total price to the end customer.

It looks like they've just rounded up the amount they've increased the prices by. A quick look at an IG page shows increases of £1.50 on £55 and £60 products (2.7% and 2.5% respectively).

GW must legally return to the government the 20% VAT added to whatever is the non-VAT price, which of course they set themselves.

With VAT set at 17.5%:
Retail price = £50
non-VAT price = 50 / 1.175
= £42.55

With VAT set at 20%
Retail price = £51.25
non-VAT price = 51.25 / 1.2
= £42.71

GW have therefore added 16p to the non-VAT price of whatever product they are now selling at £51.25. They keep that extra 16p for themselves, when they send the VAT on to the government.

If GW had kept the non-VAT price at £42.55, the retail price would be £51.06.

Most retailers like to round prices up or down for psychological reasons -- it looks better to the customer.

GW could have chosen to round the price down to £51, or £50.99. This would have caused them a slight loss as they would be paying a little bit of the VAT for us.