MIT Sloan Assoc. Prof. Catherine Tucker
If you have a physical product that you want to sell in more than one country, determining the price in different markets can be challenging. You might have to open an office in each country, or at least hire a consultant to assess local demand and analyze the competition.
But if you have a virtual product — say an app for a mobile phone — setting the price for it in different countries is easy. Using the individual exchange rate, the app store instantly will convert the price from your home country to any of the world’s many currencies.
This is, very likely, how prices are set for most smartphone applications sold in different countries. As developers prefer to spend time solving technical challenges, it is all too convenient to leave the responsibility of currency calculations and pricing to Apple or Google or some other virtual marketplace.
But is this the best approach when sellinginternationally? Is there a more profitable way to price virtual products sold in different currencies?
We explored these questions in an experiment that was both a real-world business trial and an academic exercise. We wanted to see whether we could boost revenue for a virtualproduct, Root Checker Pro, an app that helps Android users customize their phones. The app is sold through Google Play — the app store for Android devices — in more than 130 countries.
For our experiment, we selected six different currencies — Australian dollar, Canadian dollar, British pound, Mexican peso, Malaysian ringgit and Saudi riyal. Over six months, we charged various prices for the app in each of the currencies to see how sales and revenue would respond.
Read the full post at TechCrunch.
Joey Conway is creator and owner of Android app Root Checker Pro. He received his MBA from the Sloan School of Management in May 2015.
Catherine Tucker is a Professor of Marketing at MIT Sloan. She is also Chair of the MIT Sloan PhD Program.