How to Localize Your App Price
If you sell apps (or in-app products), you might be losing sales because of one small oversight.
The Google Play Store (and Apple’s App Store) have made it easier than ever for entrepreneurs to distribute apps to customers all over the world. Google Play, for example, lets you offer your Android app to users in up to 136 countries. Even small-time developers now have access to a global market.
If you want to sell your software, though, you must first answer an important question: how much to charge? Pricing strategy for software is a complicated subject, and I can’t possibly cover it all in this post. But I can help you ensure that your app is competitively priced internationally.
Let’s start by assuming that you’ve already decided on a reasonable price for your app, in US dollars. When I launched my Smart Logbook app on Google Play last month, I set the price to $24.95. By the way, if you’re wondering how I can charge that much, when most apps seem to go for $0.99, it’s because it’s a niche app for pilots, not a mass-market app for consumers. But let’s move on.
Once you have a price in mind for US customers, you now get to decide what the price will be in other countries. Initially, this seems straightforward enough. Just multiply your US price by each currency’s exchange rate, right? The Google Play Developer Console even helpfully provides a button to do this automatically:
Whatever you do, do not click that button! What that button really does is make your app unreasonably expensive for a large number of potential customers.
The problem is that users in emerging markets often don’t have the purchasing power that’s typical in the United States and other wealthy countries. If you want to sell to those users, you need to adjust your price accordingly.
When I began preparing to sell Smart Logbook, I started by sending an email to a subset of my international beta testers. I told them what I planned to charge in the US and asked them what an equivalent price in their country would be. I got about a dozen helpful responses, from pilots in places like Belgium, Turkey, and Pakistan.
Of course, I needed a more scientific (and comprehensive) approach to actually set prices for every country I planned to sell to. I found the Numbeo website, which had just the information I needed. Numbeo collects and aggregates cost of living data for cities all over the world, and makes it accessible via tables and visualizations. I used Numbeo data, plus exchange rates from Google, to build a spreadsheet that calculates per-country price multipliers that account for variations in purchasing power.
I added a tab to the spreadsheet to calculate the final price of the app, including per-country tax rates. Google Play handles collecting and remitting taxes in many regions (e.g. VAT in the EU), but you need to remember to include the tax in your price. For other countries (including the United States), you’ll need to determine the applicable rates and regulations yourself.
Overall, the prices generated by my spreadsheet were not too surprising. In Canada, the UK, and most European countries, the price (before tax) was very close to the US price. Luckily, the majority of my users are from these areas.
In India, on the other hand, the 249.95 Rs price amounts to only $3.75. While that means I make significantly less revenue per Indian customer, it’s still more than $0, which is probably what I’d get if I had just set the price to 1600 Rs based on the exchange rate.
It’s still early, but so far the results of my international pricing strategy are very promising. I’m seeing a significant fraction of buyers (69%) and revenue (37%) coming from outside the United States. Many of these customers are from countries with purchasing-power adjusted prices, such as India, Brazil, and South Africa.
I’ve made my pricing spreadsheet available in Google Sheets and Microsoft Excel format. Feel free to copy/download it to use as a starting point for pricing your own app or in-app products: