Wherever you find digital shopping, you will also find different regional requirements for succeeding in those markets. To accommodate those local customs across the global market, your customer experience needs to be flexible. Flexibility in this area does not mean your customer experience needs to touch its nose to its toes. A flexible global customer experience means that your business technology gives the best customer experience to anyone who visits your site, no matter where they come from.

Localization is one technique you should use for creating the good customer experiences. It is important for maximizing recurring revenue, because it provides more acquisitions up front and more renewals later on, thus reducing your churn rates and increasing your customer lifetime value.

To help you take your business to this next level of safe and secure customer experiences optimized for global customers, we put together this analysis of the seven most important aspects for creating the best customer experience to grow your global subscriber base:

• Languages
• Currencies
• Prices
• Payment methods
• Page elements
• Taxes
• Risk management

Localize Languages

Avoid making assumptions about which language to display to your customers based solely on their geolocation. Instead, rely on the preferences customers select in the browser. Then use those preferences to deliver the right customer experience for sign-up pages, marketing emails, customer account sections and in-app messages.

Localize Currencies

If you want to raise conversion rates and maximize renewal rates, you must let subscribers pay in their local currency. Depending on your base currency, a fluctuating exchange rate may be a problem for CLV, or it may be an opportunity for unexpected cash. Research your competition and test different pricing methods to see which prices work best for specific regional markets.

Localize Prices

You can price your service in a local currency but still not offer a competitive price. When you set prices in local currencies, don’t use a floating exchange rate to convert the prices of your product, and make sure the prices display in clean, round numbers. You also have to consider the purchasing power of the average customer in your target market.

Localize Payment Methods

Localizing payment methods makes the user experience of paying for subscriptions as simple as possible for the customer. Many subscribers in different regions of the world prefer to use payment methods other than credit card. You must offer those payment methods to reduce friction in the customer experience and increase recurring revenue rates.

Localize Page Elements

Page elements are easy to overlook, but they are essential to providing exceptional customer experiences to your global subscribers. The way you display dates, prices, and form fields must all comply with local conventions, which vary widely.

Localize Taxes

If you are the merchant of record for your online transactions, you need a system in place to correctly calculate, collect and remit taxes to the proper tax authorities. Displaying taxes the right way raises conversion rates and maximizes renewals. And complying with regional tax law mitigates the risk to your business. But the number of taxing jurisdictions across the world makes achieving compliance with all global tax requirements on your own a difficult challenge.

Localize Risk Management

More and more, companies are starting to realize just how important it is to both comply with regional privacy standards and secure crucial business data from hackers and breaches. The more you know about your obligations in the areas of data privacy and information security, the safer your customers will feel and the safer your business will be.

Keystone

Localization is crucial for creating better customer experiences and earning more recurring revenue. When you implement great customer experiences, you make it easier for people around the world to subscribe to your service, and that means more recurring revenue for you.

Download the full ebook to learn all about localizing your subscription business for international markets.

The post Seven Tips for Growing Your Global Subscriber Base appeared first on cleverbridge.

As a digital merchant, you know your product is valuable to customers around the world. But you can’t just set up shop in a new market and expect overnight success.

To increase your global revenue, you must have an in-depth understanding of exactly how customer preferences vary from place to place. Then use that understanding to design unique shopping experiences for your customers across the globe.

Now, localization entails more than just translation. A true localized shopping experience depends on things like:

• Speaking your customer’s language
• Letting them pay how they want
• Setting the right price
• Designing for usability
• Displaying tax for optimal conversions

Let’s dive into each one, shall we?

Speaking your customer’s language

Truly localize your content by using words that make sense to your readers and puts them at ease when making a purchase. For example, in your U.S. store, the word for where a shopper’s products are kept is called the cart. The preferred nomenclature in Great Britain, however, is bag.

From a tactical perspective, avoid making assumptions about which language to display to your customers based solely on their geolocation. Instead, rely on the preferences customers select in the browser. Use those preferences to deliver the right customer experience for sign-up pages, marketing emails, customer account sections and in-app messages.

Letting your customers pay how they want

Letting your customers pay how they want involves two elements: currency and payment method.

Localizing currencies

If someone in the U.S. were to walk into a brick-and-mortar store and see items marked for sale in euros or Japanese yen, there is a good chance they would walk right out of the store without buying a thing—it’s too confusing and not worth the hassle.

The situation is the same when shopping online. Consumers do not want to see product prices displayed in an unfamiliar currency. Show pricing in currencies that are relevant for the customers in that country.

Localizing payment methods

Know which payment methods are the most popular and make sure you offer them. Always keep an eye on the latest trends in the markets you serve, and add payment methods accordingly.

Do your research, because what is typical to you as a consumer in your home country may be a barrier to conversion for someone buying online on the other side of the world.

For example, most Americans use credit cards for ecommerce purchases. However, the situation is very different across European countries. In Germany, customers tend to use PayPal, wire transfers and direct debit payments more than they use credit cards. In the Netherlands, the vast majority of shoppers avoid using credit cards and prefer to use the local iDEAL system. Your carts must support your shoppers’ payment preferences in order to convert them effectively.

Setting the right price

Dig deep into fluctuating exchange rates and local purchasing power to determine how to price your products.

Just because U.S. customers will purchase your product for $50 does not mean that someone from India or China will too. A $50 product (converted to local currencies, of course) is probably unreasonable in these areas considering that the average income per person is well below what it is in the U.S.

If you are a merchant located in a market with a strong currency you might have to drop your prices in other markets just to stay competitive. It may result in lower revenue than you would like, but it goes a long way in improving conversion rates and decreasing piracy for your products in countries that cannot afford to pay your typical asking price.

Conversely, if you are a merchant located in a country with a weak currency, you might consider raising your prices for markets that can bear to pay a little more. If you don’t do this, you may be perceived as offering a lower quality product that consumers won’t trust.

The key is to determine the purchasing power equivalence of your global visitors to help you understand the relative value of a currency. Don’t forget to research how your competitors price their products in your target markets.

Designing for usability

Know what successful design looks like in the countries you are trying to reach.

For example, in English language homepages, you’ll often notice a heavy emphasis on the search field, few featured images and a minimal amount of text.

In other regions like Japan, one sees many more links, a lot of text and less emphasis on the search options.

To ensure that you’re assuring customers with proper presentation, research the most popular websites in the countries you are interested in, and have native industry experts help design your site if possible.

Displaying Tax for Optimal Conversions

Although ecommerce removes many barriers to global selling, there are challenges that occur no matter how you sell your product. One of the most important issues is calculating, collecting and remitting sales and/or consumption taxes when required by the laws of the countries you are selling in. Compliance is achieved by consulting your own legal advisors, so don’t take this as legal advice.

However, we do know a thing about optimizing conversion rates by localizing the way you display the tax on the sale.

In the U.S., sales tax is added to the advertised price. Customers who go to a brick-and-mortar store and see a price of $79 know they will ultimately pay more than that. In Chicago, Illinois, the sales tax is 10.25 percent, which means that the tax on a $79 product is $8.20 So, on a website, the product would be advertised for a price of $79. However, once the customer enters the shopping cart, the tax is displayed and added to the price, resulting in $88.19. This is how U.S. customers are used to seeing prices, so this is how they expect it will be displayed in the cart.

In the European Union, however, Value Added Tax (VAT) is a tax on the perceived value of a product and is marketed as a component of the final price. European customers who see an advertised price of €79 expect to pay exactly €79 at checkout. Usually, an additional note on the marketed price indicates how much of that price is actually the VAT.

As you can see, it is important to be aware of not only what the tax rate is for a country when selling globally, but also how to present it to customers. Make sure your store supports these important details and are easy to implement. They make a huge difference in conversion rates.

Keystone

Once you’ve successfully localized your ecommerce, you’ve got to stay on top of it. You should continue to monitor your regional traffic and conversion rates, test different layouts for conversion rate optimization, and always research new payment methods. Localization never ends.

For a deeper dive into localization, check out our 7 Tips for Growing Your Global Subscriber Base.

The post Localization 101 — Five Elements to Optimize Conversion Rates appeared first on cleverbridge.

The importance of monitoring currency fluctuations and assessing your pricing strategy cannot be overlooked. We’ve covered this in the past during the Greek debt crisis. With the U.K.’s recent vote to exit the European Union (the so-called Brexit), it’s a vital time to revisit how products are priced in volatile markets.

Brexit Impact on Currency Markets

The Brexit vote is still fresh, but proves once again that the daily tumult of geopolitical change can have a direct impact on your revenue.

Even at this early date, however, looking at the dramatic currency swings already underway, it’s clear that revenue will be directly affected for any company that sells globally. Figure 1 below shows the currency exchange rates between the British pound and the euro between May 25, 2016 and June 27, 2016.

Impact on Subscription Pricing

Imagine a U.K. based company that sells in the EU. In order to create an outstanding customer experience for your European customers, you have a set price of €50 per month. A customer who renewed in May would have paid you the equivalent of £37.96. But their renewal on June 24 would have brought in nearly 10 percent more revenue in pounds sterling at £41.70. The weakened pound works in your favor for customers who are paying a set euro price.

But the sword has a double edge. Think of a European company selling to Brits with a fixed price of £50 a month. Your customers who renewed in May would have paid you the equivalent of €65.86. But their June renewal would take a hit, yielding only €59.95. That’s almost a €6 difference. A company with, say 25,000 monthly renewing UK customers would see June revenue down almost €150,000.

Opportunity Knocks

In the case of the U.K. company pricing in euros, the currency fluctuation carries with it a 10 percent revenue increase. The question is, what do you do with the extra funds?

You can certainly hang onto that money. Businesses can use those funds to invest in the user and customer experience of their product. They can also bank it to hedge future currency fluctuations that may not be as kind as this one.

Alternatively, the extra income provides an opportunity to invest in new subscriber acquisition. A 10 percent increase in revenue means you can temporarily drop your price for new subscribers. Essentially, the currency fluctuations have subsidized your investment in new customer acquisition.

Opportunities like this usually present themselves once or twice a year, if at all. Pay attention to current events like the Brexit or the upcoming U.S. elections. They usually indicate that you should look at your product prices.

Keystone

Wild swings in foreign exchange rates provide an opportunity to test your product’s price elasticity. Staying flexible means minimizing revenue loss and maximizing opportunities for your business to grow no matter the financial weather.

The shifting sands of international currency exchange require the right subscription billing solution.

The post Weathering the Brexit — Currency Fluctuations and Subscriptions appeared first on cleverbridge.

These five best practices can help you effectively advertise in EMEA (Europe, Middle East and Africa).

Know Your Customers

Knowing your customer base is important for every region you advertise in. Success will come by creating trust with your customer base, delivering the right content and media, and advertising products that are valuable to them. There is no point talking about the German Bundesliga in Italy, or Gaelic Football (GAA) outside of Ireland.

Overcome Language Barriers

One of the greatest challenges in advertising to customers in EMEA is the language barrier. Europe itself has the greatest linguistic and cultural diversity of the Western world. Although English is considered the international business language, certain cultures relate better to advertisements in their native language. Examples are: the French, Germans, Russians, Spanish and Italians.

If you only have English ads available, use British English terms when targeting EMEA customers rather than American phrases. For example: The word “vacation” is used in the US and “holiday” is used in British English. The same goes for the season “fall,” which is used in the US, while “autumn” is more commonly used in British English.

Follow Country-Specific Laws

Since the rules and regulations of online marketing are regularly reviewed and updated, it is important to know your online advertising laws. For example, on May 11, 2011, the European Union made changes to how companies worldwide are allowed to collect or use information from European website visitors. The legislation is called the European E-Privacy Directive. The same goes for the Middle East, where religious, cultural and political factors need to be considered before targeting this region.

Products and Services

Getting a product or service in front of the right consumers is always a challenge — especially when you are advertising on a global scale. It is difficult to promote a product or service that consumers are not familiar with. Some questions you should always ask yourself:

• Is there a demand for this product or service in EMEA?
• Who are the major competitors?
• Does it make sense to advertise in this country?
• Is this product legal?
• Do we need to translate the name?

Both Clairol and the Irish alcoholic drink Irish Mist did not properly consider the German language when they launched their products there. Clairol’s hair-curling iron Mist Stick and the drink Irish Mist both flopped. Why? ‘Mist’ is the German word for “manure.” Fancy a glass of Irish manure?

Localization and Currencies

If you are focusing on one particular country, it is important to offer the right currency. For example, it does not make sense to advertise a price in Japanese yen if you are promoting a product to French consumers. You want the product or service to relate to your audience as best as possible and for them to make fewer decisions throughout the buying process. Before diving in to a specific market, take time to research which countries within EMEA you want to focus on and how you would treat the different language, cultural and business issues, rather than treating EMEA as one. Ask for guidance from your vendors and manufacturers on which countries convert best and if they have any particular advice for you.

Find out if you need any extra links or banners for a certain region. Vendors are usually open to sending additional content in order to help drive sales.

Once you are aware of the potential setbacks and challenges you face when promoting within the EMEA region, creating a plan of action based on these best practices can help you overcome many hurdles along the way.

Amy Carabini is an Affiliate Marketing Manager at cleverbridge.

The post Best Practices for Affiliate Marketing in EMEA appeared first on cleverbridge.

Effective localization creates customer comfort and convenience at every stage of the buying process.

The Internet facilitates international trade like nothing in the history of humanity. As a software vendor, you’re offering a valuable product to customers around the world. But you know that you can’t just enter a market and expect over night success. You need to understand the local culture in which you are trading and adapt your selling techniques accordingly. The process of adapting your offering to a new market is called localization.

With all that being said, there are many areas of your ecommerce business that require localization. For example, the text of your actual product might need to be translated. Your paid search advertisements also need localization. And, of course, your checkout process and shopping cart need to be localized.

“Localization is the process of adapting internationalized software for a specific region or language by adding locale-specific components and translating text.” –  via Internationalization and localization – Wikipedia, the free encyclopedia.

It’s important to understand that localization is far more than mere text translation. It requires localized elements and placements aside from text translations – something that provides a familiar experience to the online shopper. Designing the ultimate localized shopping experience depends on:

• Knowing who your visitors are
• Knowing which visitors are converting
• Offering local currencies
• Setting the right price
• Allowing preferred payment methods
• Localizing form fields
• Complying with tax laws

Thanks to a revolutionary growth in pervasive Internet technology, the borders of our global village have collapsed. Though this growth and pervasiveness has created a new paradigm of international trade, it has not created a homogenous set of shoppers.

Each community still retains their particular preferences for marketing and buying that fuel local trade. You’ll need to discover the best methods of tapping into regional markets, and we hope this overview of localizing for global ecommerce will be your guide for optimizing your current offering.

If you partner with a third party ecommerce solution, its imperative that they have capabilities to help you manage your target markets to help increase revenues from those locations.

Did You Know?

The cleverbridge ecommerce platform provides extensive localization capabilities with 30 languages, 29 currencies and 27 payment methods enabling clients to maximize their global sales. 

Get our complimentary cleverbridge white paper to see if you have the capabilities you need to maximize online sales in foreign markets.

The post Localizing Ecommerce [White Paper] appeared first on cleverbridge.

Anyone selling digital products globally knows that what works for one region does not necessarily work for a different region. The Japanese market is complex and requires tailoring your software and ecommerce solution to fit local business conditions.

From cultural design differences to quality assurance testing; from customer expectations to payment options, you need to understand how to manage your go-to-market strategy for Japan.

Enjoy this video presentation from cleverbridge general manager Yosuke Ito as he teaches the ecommerce community about such important issues as:

• Language barriers
• Web design and UX
• Currency and payment methods
• Testing different hardware environments
• Customer support

For a more condensed version of the information in this video, check out our infographic: “The Rising Sun of Japanese Ecommerce.”

The post Ecommerce Eye Candy – Navigating Japanese Ecommerce [Video] appeared first on cleverbridge.

Let’s say that you’ve set customer friendly prices in local currencies, and your system routes customers to prevent them from currency shopping. An equally important topic to consider as part of an on-going pricing strategy is your foreign currency pricing.

Depending on your base currency, a fluctuating exchange rate may be a problem or it may be an opportunity for unexpected cash.

In order to plan strategically you need to decide between two questions: “Do I want to be paid the same amount for my product in foreign currencies?” or, “Am I looking to price my product according to what the market will bear?”

With the former strategy, you know exactly how much you will earn in your home currency for each sale. With the latter, your product will either be priced higher or lower than your domestic price.

What is your best option?

If you followed our introduction to Japanese ecommerce, you learned that Symantec prices their flagship product at $99.95 in the US. Since the rate of Japanese Yen to US Dollar is about 70:1, the price in Japan should be approximately 700¥. Yet, the product in Japan is priced at nearly 2,000¥.

Why?

Well, the Japanese market bears a much higher price, so a company that enters the Japanese market with a 700¥ price is potentially leaving money on the table. Also, it’s possible that such a low price indicates an inferior product to consumers.

Pretend, though, that the scenario were reversed and the market will bear 700¥, but the exchange rate suggests a price of 2,000¥. What are the chances that your product priced at 2,000¥ will be successful when the market price for such a product is only 700¥? Don’t stake your career on this line of thought.

The importance of your foreign market pricing strategy is clear. But choosing a price point for your product is only the beginning of this challenge. You must now monitor currency fluctuations. The image below shows how the U.S. dollar grew stronger relative to the euro from April 30th, 2012 to May 31st 2012.

Now imagine that you are a US company and your product’s base price is $50. You sell to Europeans, so when Europeans visit your site, you route them to a cart with the product priced in euros. If your strategy is to do strict currency exchange, on April 30 a converting visitor pays you 40.45€ and a converting visitor on May 31 pays you 37.76€, representing a 6.66% difference. In both circumstances you have earned $50 (See Figure 2).

Fig. 2

There are a couple risks present in this scenario. First, customers are seeing different prices on different days. Even though US consumers pay the same price on April 30 and May 31, Europeans buying on April 30 will pay more than those buying on May 31. This discrepancy may increase customer contacts and refund requests. Second, a price based on a strict currency conversion may not play well in that market which affects your conversion rates.

Based on these risks, perhaps you’ve decided on a set price for European customers, regardless of currency fluctuations. In the scenario outlined in Figure 2, a product priced at 40€ will earn you $49.44 on April 30, but $52.97 on May 31.

Fig. 3

If your product price was fixed at 40€ while the exchange rate was fluctuating, you would receive an extra $3.53 since the USD strengthened during May. On the surface the fluctuation works to your advantage because you now have more dollars.

But if we flip the scenario and consider that the dollar weakened relative to the euro from May 31 to April 30, you would have received $3.53 less than previously earned. This may not seem like a lot of money, but multiply this over the hundreds and thousands of orders every month and it adds up.

These fluctuations offer an opportunity for taking an unexpected revenue increase to see if your product’s price is elastic. First, it’s important to set prices in marketing friendly foreign currencies. Let’s stick with a product priced regionally at $50 and 40€. As the currency changes, your customers paying in those currencies don’t see any difference, but you do in the amount of money that you receive.

If you receive an extra $3.53 because of your home currency strengthening , this puts an extra 6.66% at your disposal and you can either drop your price 6.66% and see if there is a noticeable increase in sales, or leave your price the same and promote a 6.66% discount in a marketing campaign and see if this results in meaningful sales. In either case, you will gain insight into how willing your customers are to buy your product at different prices.

Opportunities like this usually present themselves once or twice a year, if at all. Pay attention to current events like the recent Greece debt crisis. They usually indicate that you should look at your product prices.

Keystone

 Wild swings in foreign exchange rates provide an opportunity to test your product’s price elasticity.

The post Foreign Currencies Are Wildly Fluctuating. Have You Looked at Your Product Prices? appeared first on cleverbridge.

• Language barriers
• Web design and UX
• Currency and payment methods
• Testing different hardware environments
• Customer support

You can play this YouTube version of the webinar to learn more about this fascinating subject. Some excellent questions were posed by attendees at the end of the webinar which we have transcribed below.

What percentage of online sales are for software products?

We did some research looking for that data. We found that in the US, according to data from Forrester, the software market itself, or rather the SaaS market in the US is 10% of the overall software market. To extrapolate to Japan, if you were to assume the overall percentage is a little less, let’s say 5%, you’re still looking at a $20 billion market for software in Japan.

 The good thing about the Japanese market is that once a trend is accepted, everyone follows it. So if we already see that SaaS is expected to grow over 2000% in the next ten years, even without specific numbers, we can see that the market is growing.

I’ve noticed that many Japanese companies include some boilerplate content on their websites: company information like market cap, date of incorporation, etc. Is this mandatory in the Japanese market?

It is not mandatory but it is a common way to size up a company, to measure a company’s success by how long it had existed and how many people work there. The longer a company has been around and the more people that work there indicate how reliable and successful that company is to a Japanese customer. This is the reason why you may see information like this on Japanese sites. What is most important to Japanese visitors is to see information that shows local addresses and whether support is given by native Japanese, as Japanese consumers prefer to deal with Japanese companies.

American customers almost never use bank transfers to pay for things online, whereas in Germany about 40% of orders are paid with bank transfers. Do Japanese customers prefer wire transfers as an online payment method?

In the past, bank transfers were a very common way to remit payment and in online business, credit cards were not that popular. However, as time has progressed, fears of mass fraud have not occurred so that the use of credit cards has grown a lot in online shopping. It’s also important to understand that Japanese consumers have a lot of protection when it comes to credit card fraud, so they are more willing to provide that information online. Still, Japan is considered a cash oriented culture and the use of Konbini as a payment method is popular.

Is there a big difference between western user interfaces for software and Japanese UI for software?

Since most software is not native to Japan, the look and feel of western software is familiar to Japanese users. Still, the language elements, especially the written ones, need to be changed for a Japanese audience.

How well is software received if the program is localized but documentation is not localized?

It’s important to understand that Japanese consumers read product manuals thoroughly; it’s the first thing they do when they buy a product. If the manual is in English, this presents a big issue. So even if the website is localized, but the product documentation is not, a Japanese consumer may be turned off.

Are there any special differences in the enterprise and consumer markets?

B2B online sales are not popular. Due to the requirement of purchase orders, companies are reluctant to use corporate credit cards to purchase software online.

Do Japanese consumers prefer instructions through printed or video media?

There is a generation gap here. For some reason, the older generation is more comfortable reading written instructions, while the younger generation prefers instructional videos.

Tell us below in the comment section about your interest in selling software in Japan.

The post Navigating Japanese Ecommerce [Webinar] appeared first on cleverbridge.

This week, we are celebrating Thanksgiving here in the U.S. — so we wanted to take this time to thank you for your support and involvement in Building Keystones. We realize that your comments and insight are the key to this blog’s success.

To commemorate this time of giving thanks, we’ve gathered a few of our favorite blog posts from the past few weeks that we think you’ll enjoy. We hope they spark your interest — we encourage you to take part in the conversation by posting any questions or comments you have.

The Next Wave In Commerce – Social

Social commerce is a wave that is building in the online ocean. We can see the beginning effects of it now, which means it’s time for your company to evaluate your social commerce strategy is as part of your overall business strategy (of course).

Design Your Website For A Global Market

Localization goes beyond translating text. When selling internationally, research the aesthetics and usability considerations of the targeted culture — and design accordingly.

Conversion Rates: A False Sense Of Security?

It is important to establish your own customer conversion rate baseline. Start by defining the beginning and end points for your conversion rate calculations, then attempt to improve, rather than focusing on the actual number against the industry, which is in our opinion, is rather meaningless.

Set Customer Friendly Prices In Local Currencies

Decrease ecommerce friction and cart abandonment by setting prices in clean, round numbers in every local currency, and don’t forget to price your products appropriately for the market.

Don’t forget to visit our Facebook page and tell us what topics you would like us to cover in the future! We welcome your feedback.

The post Thanksgiving Recap: Our Favorite Blog Posts appeared first on cleverbridge.

The ability to sell globally is generally viewed as one of the most attractive things about digital products. However, pricing in the digital product space gets even more challenging because you are not only competing in your home market, but also around the world with companies that have different cost structures.

As discussed in a previous blog post, pricing your products in local currencies and marketing-friendly prices helps lower barriers to purchasing. Recently, a top anti-virus manufacturer from Europe displayed a 29.34€ pop-up advertisement from their free product. As someone that lives in global ecommerce, I wasn’t shocked, but the average American would definitely raise their guard upon seeing such a price.

If you sell a product competitively for £50 in the UK, converting that product to U.S. dollars results in a product that costs about $80 in the U.S.A. However, competitors in the U.S. might price their product at $50, so even though you are pricing in the local currency, you are not price competitive and price conscious shoppers will abandon your site for a competitor’s. The need to lower pricing is often a hard pill to swallow for companies that roll up transactions to their home currency but it is a necessary exercise to compete locally.

Hopefully, the cost of producing one more digital product is nominal so that you have flexibility in modifying your prices to compete in local markets.

Let’s assume that in each country, 50 is the magic number for a competitive cost (for Japan, we chose something approximate to illustrate our point). Someone in the U.S. considers $50 as the fair market price of their product while someone in Germany considers 50€ the same. The bold prices in the chart below are the base price and other prices in the column are converted based approximately upon today’s exchange rates.

We infer from this chart that someone manufacturing the same product in the U.S., using today’s exchange rates, could price their product at 35€ and still receive the equivalent of $50 for their product. This 35€ price would undercut the European manufacturer of a similar product.

Likewise, the British manufacturer is competitive in Britain at £50, but is overpriced everywhere else if they simply use the current currency conversion rate. This all seems to make sense based upon what we all know with manufacturing heading to cheaper places like Eastern Europe, Southeast Asia and China.

To further illustrate the point that you need to consider not just what the exchange rate is, but also how competitive your price is in other countries, let’s look at prices for the same products produced in these four countries in 2002 (i.e. based upon currency conversion rates at that time):

At that time, the U.S. manufacturer was at a disadvantage in other markets and the European and Japanese manufacturers were in a much more favorable position.

Take Away

What can I do about this?

You can not simply use the current currency exchange rate as a basis for pricing your products in other markets! If you live in a country with a strong currency, like the EU countries or Great Britain, you are at a competitive disadvantage in other markets.  If you are in a country with a weak currency, like the U.S., you can certainly use the exchange rate, but there is also an opportunity to increase your prices to still be competitive with the local market and make a little more money, but watch out for losing sales as an outsider.

Watch monthly for currency changes!

Keystone

When pricing your product in foreign currencies, be sure to look at the local competition or you can price yourself right out of a market.

What tips do you have for pricing your product in other markets?  Is this an absolute rule or are there exceptions?

The post Need Help With Your International Pricing Strategy? appeared first on cleverbridge.