As a phrase, 'Rip-Off Britain' is often used with tongue firmly in cheek, but the ethos behind it is deadly serious. First coined by tabloids, the phrase has now garnered new meaning as large companies continue to make UK customers pay for the strength of the pound - and the fact we don't work in euros or US dollars.

Of course, as the pound is currently strong, the pricing differentials seem particularly stark. Tech.co.uk's Anna Lagerkvist is looking at the marked differences in software prices on both sides of the pond; we're looking at the hardware differences here.

So to use a common example, let's start with the iPod. It costs $249 for the 30GB model in the US - that's just over £126 - whereas in the UK the iPod costs £179. And what about PCs? Let's go for an Extreme version. The high-end Dell XPS 710 replete with quad-core Intel Core2 Extreme processor costs £2,222 for a basic spec in the UK. The US equivalent machine costs $4,098, or £2,077. Now, that's more like it, don't you think?

Except the US model includes a Dell 20-inch Wide Ultrasharp Flat Panel as a default - it's an option for the UK model.

Tax, tax and more tax

At the lower end of the market, cheap laptops vary wildly - around £230 for a bog standard Vista Basic-sporting laptop at Best Buy , as opposed to £339 for an equivalent notebook at PC World .

However it's not as cut and dried as that, since of course UK prices include lovely VAT at 17.5 per cent. US prices don't include tax as a default. As you may know, US tax is calculated on a state-by-state basis. Online vendors ask US citizens for their zip code so the tax can be calculated. This can be up to 10 per cent, so on the Dell purchase it's a sizeable extra. On the iPod though, it's only around $14, so it's an easily swallowed cost.

Many companies say there are extra costs that come with doing business in the UK. It's not necessarily about localisation of a product, since there are plenty of situations in which hardware is cheaper in a country where more localisation is needed.

Instead, higher prices are often blamed on a variety of factors such as higher labour costs, the higher price of living and even things like promotional costs, as well as importation and shipping costs. At a recent European conference we attended, a desktop product manager was quite frank on the issue: "things just cost more over here," he said.

Europe, not America

And in many cases, we're not only paying for the Brit factor, we're also paying costs associated with preparing kit for the Euro market, such as the translation of manuals or re-boxing. The bottom line is that the cost per unit is far less in the US than expensive old Europe, with its swathes of salt water, diverse languages and different currencies.

When Windows Vista was released, Microsoft reckoned that currency fluctuations don't affect pricing, since this leads to 'pricing instability.' Likewise, many hardware vendors deny that price fluctuations are down to currency fluctuations.

At the time, Microsoft released a statement to give some reasons for the price differences between what we are charged here and what punters have to pay in the US and elsewhere. The comments also ring true for other areas of the industry.

"In times of increased currency market volatility, the relative difference between local price lists can be significant at a given point in time, said the statement.

"In view of the unpredictability of exchange rate fluctuations and the importance customers attach to localisation of their cost of doing business, Microsoft believes that our customers are best served by price stability."