People often cite Switzerland as the most expensive country in the world. Several of its cities, Zurich and Geneva, are also often named in the list of most expensive cities in the world.
Now, is it as expensive as people believe it is? Is everything more expensive, or are just some items significantly more costly than others? And finally, are some things cheaper in Switzerland than in other countries?
In this post, I am going to answer these questions. We are going to discuss the price of several things in Switzerland. It should give us enough material to answer the question of whether Switzerland is so expensive!
Grocery shopping is costly in Switzerland. If you have been in any other country, it should be pretty clear that groceries are too expensive here!
If you shop at a medium price shop like Coop and Migros, you can save a lot of money by buying in another European country. However, if you shop at a German discounter like Lidl or Aldi in Switzerland, you will not save that much money. Aldi and Lidl are reasonably priced in Switzerland. And you do not have to cross the border and drive your car far for that!
This fact is especially true for Swiss products. For instance, Swiss meat is incredibly expensive. Except for pork, we rarely buy Swiss meat. It is kind of sad. But I am not willing to pay 50% more for Swiss meat. It is good quality, but it is not that much different in my mind. Many people go to the butcher in France to have cheaper meat, especially beef.
Even though grocery shopping is expensive in Switzerland, there are ways to reduce your food budget. It is mainly done by avoiding Swiss shops and preferring the German discounters. And if you want to lower your bills, you will have to opt for some foreign products.
Unsurprisingly, shopping is expensive in Switzerland, even in small cities. For some reason, magazines are significantly more expensive in Switzerland than in other countries. We pay around twice the price of the same magazine in France or Germany.
Cosmetics and clothing are also quite more expensive in Switzerland than in the rest of Europe. Shoes and toys are also a little bit more expensive.
Now, all of these results are based on average prices. If you look for it, you can find cheap clothes in Switzerland, for instance. There are such vast differences between shops that the average is quite high.
For instance, shops like H&M and C&A are not that much more expensive in Switzerland than in other countries. But the average is highly skewed towards luxury items.
Electronics are cheaper in Switzerland than in all neighboring countries. It is as cheap as the United States and even cheaper than China for several things.
Laptops, phones, and such are available at an excellent price in Switzerland. I said obscure reasons because that is the only consumer product that is cheaper here than in Europe. And nobody seems to know why. One reason is that the tax on these products is lower than the average in Europe. But that does not explain everything.
I see several possible reasons for that:
1. All electronics are built abroad with cheaper employees.
2. A lot of electronics are coming from the U.S. (after being assembled in China) or from China. And our currency is quite strong against theirs.
3. The VAT on electronics is 7.7%. It is very low compared to some countries such as the U.S., with about 18% VAT on these products.
I am not sure these are the only reasons. But at least, we are lucky to be able to purchase electronics at such prices. For me, it is almost not a good thing since I really like computer gadgets. So I spend too much on them. But it is not that bad.
These days, the best way to buy electronics in Switzerland is to shop online. I have a guide for shopping online in Switzerland.
Another very expensive thing in Switzerland is going out. Almost everything that you can do to go out is too costly, in my opinion.
Restaurants are costly. Unless you go to a fast-food restaurant, it is difficult to find a meal for less than 20 CHF. And most menus are generally around 50 CHF. And if you add some drinks to that, it can very quickly add up. I may be cheap, but I do not enjoy spending around 100 CHF for an average dinner out.
Even for Swiss people, I feel like restaurants are very expensive. In a lot of countries, you can regularly go eating out. But in Switzerland, eating out often would be very expensive.
If you want to go to the movies, you should plan at least 20 CHF per person if you wish to have a drink or a small food item. These days, I am very rarely going to the movies. There are other ways to have a good time. And going to the city just for a movie does not appeal to me anymore. We can watch good movies at home, on a better sofa.
Other activities are quite expensive as well. Going to the museum or the theater (the actual one) is not cheap either.
Something that is very expensive in Switzerland is Real Estate. Both renting and buying are costly.
Switzerland is one of the countries with the lowest house owners percentage. Two-thirds of the population in Switzerland is renting, even outside of cities. The main reason people are not buying is because of the very high price for real estate.
And the fact that so many people are renting drives up the price of rent. It is a vicious cycle. And let’s not forget that the country is quite small. With the strong regulations that are in place, it cannot expand very fast.
There is one good thing about real estate is that interest rates are very low. So, you will need a substantial downpayment, but you will pay less in interest payments.
Even though the price of entry is higher, it is cheaper in the long-term to own a house than to rent. I mentioned houses because houses are particularly expensive to rent.
If you want to learn more, I have a guide about owning versus renting in Switzerland.
Public Transportation is very expensive in Switzerland. I do not like Swiss public transportation.
It costs me about 60 CHF to go to Geneva by train. And it costs me 16 CHF to go by bus to work and come back. It is simply insane.
If you can take a travel card, it becomes fairer. But a general card to travel in entire Switzerland will still cost you about 4000 CHF per year. And remember that the country is tiny! If you do not have a card, taking public transportation is very costly! Single fare tickets in Switzerland are the most expensive from any country I have ever visited.
Cars are also more expensive than in other countries in Europe. However, gas is cheaper than in most developed European countries such as France and Germany. But you will pay a ton of taxes on your car, and you will have mandatory insurance. Overall, it is probably about 20% more expensive in Switzerland than in the average European country.
In Switzerland, we have an excellent education system, probably around the best in the world.
But contrary to many things in Switzerland, education is affordable. The states fund public schools. This federal funding means you will not have to pay any tuition fees.
And even advanced education such as Bachelor’s and Master’s degrees is subsidized by the state. You will very rarely pay more than 2000 CHF per year for a school. And this is already on the high of the fees. My parents never spent more than 1200 CHF per year on my education.
The Swiss education system is incredibly better than the crazy system in the United States, where students end up with tens of thousands of dollars in student debts.
However, you need to keep in mind that most schools are charging significantly more for foreigners. If you are not Swiss, you may have to pay more than, especially at the university level.
Healthcare is another thing that is very expensive in Switzerland. Here, health insurance is mandatory. Every member of your household will have to pay for health insurance. It can quickly go for 300 CHF per person and month.
And even though you are insured, there are still many things you will have to pay for yourself. Each insurance also has a deductible. And a visit to the doctor or some drugs at the pharmacy can very quickly pile up.
Together my wife and I pay close to 800 CHF per month in health insurance. And we still have to pay almost everything ourselves because of our high deductible.
You can learn more in my guide to health insurance in Switzerland.
Tourism is expensive
One reason that many people say that Switzerland is so costly is that tourism in Switzerland is expensive.
I already mentioned that restaurants are costly. It is already bad for tourists. But the hotels are also expensive. In most cities, even cheap ones, it is complicated to find a hotel below 150 CHF per night. And some hotels are much more expensive than that.
And if that was not enough, popular attractions in Switzerland are incredibly expensive, even from a Swiss point of view. For instance, if you want to go to the Matterhorn, the most famous Swiss mountain, you will have to pay about 100 CHF per person! I think this is just dumb. All around popular Swiss attractions, prices are going up very quickly.
Even for Swiss people, going to these very popular places is very expensive. Even though it is a pleasant experience to go to the Matterhorn, I do not think it is worth more than 100 CHF per person.
The high cost of tourism is a big reason why most Swiss people do not travel much in Switzerland. For us, it is cheaper to travel to European countries than it is to travel to Switzerland. It does not make sense, right?
If you want to travel abroad instead, find out how to travel abroad for less.
Taxes in Switzerland
One thing that is good in Switzerland is that taxes are very reasonable. Switzerland is among the cheapest countries for taxes. We pay taxes on income and wealth in Switzerland.
On average, people are paying about 10.5% of their net income in taxes. However, we are also paying taxes on our gross income. These extra taxes are directly removed at the source, so we never see it. It is about 5% of our gross income on average. So I would say that the real tax average is about 15%.
This average is much lower than in many other countries. For instance, people in the U.S. pay 18% on average, and people in Denmark are paying 36%!
Of course, there are vast differences between the different states in Switzerland. In some situations, taxes can double from one state to another.
Now, it is essential to consider that we also pay some direct taxes based entirely on our gross income. These are deducted directly from our salary every month. Some of these deductions are for our pension, so they should not be counted as taxes. However, we also pay for the invalidity insurance directly from our salary. It needs to be taken into account when comparing with other countries.
If you want to learn more, I wrote a complete guide about taxes in Switzerland.
When foreigners talk about Switzerland, they often think of places like Zurich or Geneva. And these two cities are the two most expensive cities in Switzerland. Therefore, foreigners directly believe that Switzerland is incredibly costly everywhere. Even some people from Zurich and Geneva think that the prices are the same all over Switzerland.
They could not be more wrong! There are huge differences between cities in Switzerland. It is several times more expensive to live in Zurich city center than to live in a small village in the state of Zug.
For instance, a standard apartment for 4000 CHF per month is not that surprising in Zurich. But in Fribourg, it would be incredibly expensive. You could have a prime apartment in the center of the city for this price.
On average, Switzerland is much cheaper than these two expensive cities. And while it is true that Switzerland is expensive, it is not as extreme as some people believe.
If you want to learn more about the differences between cities and states, read about Geo-Arbitrage in Switzerland.
Income in Switzerland – It is all relative
The high income of Swiss people can explain a lot of the expensiveness of Switzerland.
The median income in Switzerland is about 6200 CHF (6200 USD) per month. The median income in Switzerland is significantly higher than in most countries. There are some significant discrepancies between cities and states and also between jobs. Interestingly, the average income is considerably higher at around 8000 CHF.
Even when you put together the high income with the high prices of Switzerland, we still have a high purchasing power in Switzerland. We do have one of the highest purchasing power in the world. Purchasing power is more important than price.
A very good representation of purchasing power is the so-called Big Mac Index. It compares the price of a Big Mac in every country and compares how long it would like for a person to work to afford one.
This study shows that Switzerland has the most expensive Big Mac in the world at 6.57 USD. However, we only have to work about 11 minutes to get one. For comparison, for a much cheaper Big Mac, a worker in Beijing needs to work 42 minutes for it. It is a perfect way to put things in perspective.
Switzerland is indeed expensive compared to the rest of the world. Many things are significantly more expensive here than in most countries.
From my point of view, I do not think that Switzerland is expensive overall. We have high incomes and low taxes. Even with the comparatively high prices, we still have a nice purchasing power. However, I think that some things are too expensive here.
Mainly, I think that health care and public transportation are too expensive. I would also say that real estate is in pretty bad shape right now.
From a tourist point of view, Switzerland can seem extremely expensive. If you have a good salary in your country, but that country is twice cheaper than here, you may be shocked by the prices here. And it is indeed a costly place for tourists.
If you want to learn more about how people spend money in Switzerland, read about the Average Swiss Household and their expenses.
What about you? Do you think Switzerland is so expensive?