Most North Americans traveling to Europe seem to be met, to some degree, with sticker shock. There are several factors contributing to this. The biggest factor is, of course, that Europe is a tad bit expensive but prices are very hard to compare between countries for many reasons. It is not so much that prices in Europe are so much higher but that they are quite different.
A huge difference in how Americans see prices and how Europeans see prices is in how taxes are disclosed. In Europe, the price that you see is the price that you pay. A four Euro sandwich costs you four Euros. It’s that easy. You look at the price and can have your money ready – just hand over two two-Euro coins and the sandwich is yours. In the US, for example, you look at a four dollar sandwich, get to the counter and are then told what the real price is as tax(es) is added in afterwards and tax rates vary from town to town so knowing what they are ahead of time can be difficult.
Europe is famous for its high sales tax (VAT) but in my experience it is not much higher than sales taxes in the States and, at times, I have even seen it be around half of common American tax rates. Hotels, a big deal while traveling, are a great example. The price of your European hotel might seem excessive but when you go to check out and realize that your eighty Euro per night hotel costs actually eight Euro per night you will be very surprised. It is not uncommon at all for hotels in the States to have tax rates levied against them approaching twenty percent (and in some cases even higher.) This means that one hundred dollar per night hotel room in New York might easily cost you one hundred and twenty dollars when you go to check out. That is a huge price difference.
The use of “real” prices in Europe makes things sound more expensive when comparing stickers but makes the actual transactions a bit less expensive than you believe. In reality it is a far more honest system and allows consumers to actually compare prices of things and makes it impossible (or nearly so) for vendors to fudge the numbers and use tax as a way to overcharge you. In the US they just add on a surprise tax at the end, hope that you don’t notice and there is nothing that you can do about it since you don’t know what the tax rate is and what taxes may or may not apply to you.
Travel to Europe almost always involves visiting heavily touristed areas of large, wealthy cities. The average European travel experience is going to involve eating in the hearts of Paris, London, Rome, Berlin, Florence, Venice, Nice, Madrid, etc. A European traveling to the US or Canada would likely have a similar experience. Go to our own major tourists centers, New York City, Los Angeles, Montreal or Orlando and try eating at sit down restaurants right in the heart of the city in the spots with all of the tourists (Times Square, near the most popular museum, inside Walt Disney World) and see if prices in the New World are not just as crazy as those in the Old World. Often the price jump is simply caused by comparing tourist prices in Europe to regular prices back home.
European prices will also swing dramatically based on the relative strength of the Euro and the Pound primarily versus your home currency. In general the Euro and especially the Pound are quite a bit higher in value than the US or Canadian dollars. So something listed as two Pounds might equal three dollars. The need to do the conversion can be scary and confusing and it varies not just over the long haul but will change during your trip. Having prices fluctuate but five percent in a single week of travel has happened to me, fortunately it was five percent in my favor and suddenly my trip became more affordable rather than less.
Europeans also do things differently, or know how to do things in Europe, than Americans. For example, beer is much cheaper in Europe than in the States while soft drinks are extremely expensive. Going with local beer can save a lot. And knowing to order tap water, always, is important. The cost of bottled water, always offered by default, can be extreme and a complete waste as tap water is often superior to bottled water in quality, especially in Europe where tap water is extremely good. Little tricks add up over the length of a vacation.
Getting used to how prices are written in Europe, being prepared for exchange rates to fluctuate and remembering that you are likely “acting like a tourist” will go a long way to helping you to mitigate fears of high European costs. Europe really is not that expensive, but being a tourist anywhere, is. Getting away from eating three sit down meals per day, avoiding tourist traps (at least for food) and heavily touristed regions, getting away from the big city centers – there are ways to make Europe every bit as affordable as other parts of the world. Real people live here and eat here and do things in Europe every day. They just are not likely doing them in the same places and in the same ways as the tourists.