Purchasing Power Parity setting the price of your app based on local economies


Windows Phone now supports customizing the price of their games on a per currency basis. That’s where Purchasing Power Parity (PPP) comes in.

There is a great article on the subject of PPP One simple Hack to Crack IAPs in the Developing World The author Gurinder Pal Singh raise the issue that of the impact of currency conversion and the cost of living within different countries and cultures. This isn’t something which many developers actual consider when listing their game or app in any of the stores..

But the Purchasing Power Parity of each currency, is a pretty important factor the authors simply summarizes this as..

The problem is that all currencies are not created equal, some are more valuable than others. A $100 bill, when converted at the exchange rate, will buy you more stuff in India or China or Mexico or Romania and so on, than it would in the United States. So a Dollar has more purchasing power in these countries than in the United States at the international exchange rate. And that is where the concept of Purchasing Power Parity (PPP) is born.That means that a “Tier 1″ In App Purchase (IAP) costs three times as much in India than it does in the United States!

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Windows Phone Dev Center gives you the option to customize your app’s price on a per-country basis

Understanding base pricing

Base price is the price you select that will be used in every country or region where your app is sold, unless you specify a different price for a particular country or region. The base price is converted to the same price level in the local currency of each country or region. For instance, if you select $.99 USD when you save your App info, the price in France will automatically be converted to the Euro pricing that’s used for that level of application. To learn more about your app’s tax implications in selected markets, see Tax details for paid apps.

But what about PPP

Now understanding PPP and from Gurinder article I think there is a real valuable lesson. Gurinder decided to run an experiment.  He manually adjusted each of his App Purchase based on the current Purchasing Power Parity in the players currency.

The results?

The number of transactions in those countries increased by 1100%, and revenue from those countries increased by 400% which is a pheonminal  success story.

Customizing your app’s price on Windows Phone

You also have the option to adjust pricing on a per-country basis. After you’ve successfully saved your App info, you will be returned to the App Submission Hub page. Under Options, click Market Selection and Custom Pricing. Once you’re in Market Selection and Custom Pricing, select from a list of countries or regions you’d like to set new pricing for and save your changes. Price changes will be applicable to all new purchases only.

Price considerations for specific markets

Payment methods such as mobile operator billing can help increase sales of paid apps and in-app purchase items in markets where credit card use is low.

What are the considerations of using Mobile Operator Billing

Due to the higher costs to enable mobile operator billing, a Commerce Expansion Adjustment of 13.9% is added to the Store Fee deducted from Net Receipts to calculate the Application Proceeds payable for paid apps and in-app purchase transactions in the following countries/regions .

 

Country/Region

Payment Methods

Effective Date

Argentina

Mobile Operator Billing

March 2014

Chile

Mobile Operator Billing

March 2014

Colombia

Mobile Operator Billing

March 2014

Costa Rica

Mobile Operator Billing

March 2014

Egypt

Mobile Operator Billing

June 2014

Kenya

Mobile Operator Billing

July 2014

Malaysia

Mobile Operator Billing

March 2014

Mexico

Mobile Operator Billing

March 2014

Peru

Mobile Operator Billing

March 2014

South Africa

Mobile Operator Billing

March 2014

You may want to consider if the Commerce Expansion Adjustment applies in a country/region where your app is available and factor that into your market pricing strategy.

Details about the Commerce Expansion Adjustment can be found in the App Developer Agreement.

The Commerce Expansion Adjustment will be applied to all transactions processed for the specified Country/Region and Payment Methods as of the Effective Date. This information will be updated monthly; new countries/regions and payment methods will be listed within thirty (30) days after the Commerce Expansion Adjustment takes effect for that country/region and payment method.

Go Dos.

Read One simple Hack to Crack IAPs in the Developing World How we increased our IAP Revenue from the Developing World by 400%! Consider PPP when localizing your games.

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