Do you offer lower prices in low-income countries? On which measures do you base the reductions?

Question

If this makes sense, and which reductions will be optimal clearly depends on whether it's B2B or B2C, and what your specific target audience is.

For B2C, I think it should always be done if possible, for both fairness and revenue.

Let me give App Finder, my advanced search engine for Android apps, as example (https://skyica.com/appfinder). The target audience consists of a large part of the smartphone users worldwide. As we know, a large part of the population of developing countries now owns smartphones, but has very little money to spend on software.

So, as App Finder is getting more popular, I'm now reducing the prices in lower-income countries.

I think the following measures should be taken into consideration:
- Median income, as indication for how much money the largest part of the population has available 
- Purchasing power parity (PPP), as indication for which prices people are used to
- Percentage of population living in poverty
- Maybe also VAT

Since I couldn't find comprehensive and current data for median income, I use GDP/capita and Gini for orientation. PPP factors can be determined by dividing nominal GDP by PPP-GDP. GDP data is available in the Wikipedia article for each country, and there is a quite comprehensive and up-to-date list for poverty: https://en.wikipedia.org/wiki/List_of_countries_by_percentage_of_population_living_in_poverty

Does anyone know a good source for something like median income?

Here some examples of the reductions I will use:
India -55%
Indonesia -40%
Pakistan -55%
Brazil -30%
Nigeria -60%

What do you think?

Konrad S. · Accepted Answer

@busmark_w_nika @ilya_spike I agree that multiple tiers may also be very beneficial (again both for fairness and revenue). Actually, I'm introducing 4 tiers for App Finder, with upgrades possible for the price difference https://twitter.com/appfndr/stat...

Ilya Spike · Answer

@busmark_w_nika I thought about this too, but then realized - if customer really tries to find VPN in low-income countries because they want to pay for service, and as long as you have high margin (reduction in X% of users in high-income doesn't hurt your revenue target), it should be fine.
This could be seen as learning as well - if you are getting a lot of demand for low price, maybe find a way to have a second price tier or move high-demand function to it's own tier.

Business Marketing with Nika · Answer

Yeah, we customized prices according to their average incomes but these can be overpassed by VPN (switching the connection from one country to another), soo...

Konrad S. · Answer

@busmark_w_nika Yes, this is a big problem of course. While just switching the country with VPN before purchasing will not work with Google Play, there are much-discussed simple methods to do that. I hope not that many people will do it. In any case, I believe the benefits outweigh this issue.

Shreya Gupta · Answer

The approach is sensible 🔥 You might also want to analyze market demand and local competition to ensure your pricing strategy is competitive. Consider also the cost of localizing your product to fit the cultural context.

Business Marketing with Nika · Answer

@ilya_spike @konrad_sx I am trying to handle that situation with many tiers – because I am more undecided (and potential customers could be as well) :D

Konrad S. · Answer

@ilya_spike I see. Play Billing, Google's payment system for Android apps, does have this.

Gurkaran Singh · Answer

Hey there,

First off, big kudos to you for considering pricing reductions in lower-income countries with your App Finder! It's a fantastic initiative that not only promotes fairness but also opens up opportunities for wider access.

Your approach of basing reductions on measures like median income, purchasing power parity, percentage of population living in poverty, and even VAT is spot on. It shows a thoughtful consideration of the economic context in different regions.

As for a good source for median income data, have you checked out the World Bank or the International Monetary Fund databases? They usually have reliable and up-to-date information that could help guide your pricing strategy further.

And those reduction percentages you've listed for countries like India, Indonesia, Pakistan, Brazil, and Nigeria are impressive! It's great to see a concrete example of how these measures translate into real pricing adjustments.

Keep up the fantastic work, Gurkaran Singh! Your efforts in making technology more accessible and affordable globally are truly commendable.

Cheers, 
[Gurkaran Singh, Tech Enthusiast]

Ilya Spike · Answer

I like this concept in general, and been thinking to implement it. My main concerns are:
- PSP should have an API to convert prices wherever you display them, otherwise you'll confuse customers
- if your team is in high-income country, the math might become an issue depending on your MRR / service targets. I.e. what % of traffic/users is your team able to service for the price you pay them? At some point you might need to look at your product and find what's more profitable to maintain the healthy MRR.

Ilya Spike · Answer

@konrad_sx sorry my corporatism is showing. PSP is payment service provider, or I guess any provider that you have to charge the customer.

Konrad S. · Answer

@ilya_spike - What's PSP? 
- To find the optimal prices will challenging of course. But I believe some reduction of the prices in lower-income countries will always be beneficial, only question is how much.

Konrad S. · Answer

@shreya_gupta02 Yes this is also important

Konrad S. · Answer

@thestarkster Thanks for your remarks. Yes, I checked https://data.worldbank.org/indic... and https://data.imf.org/?sk=388dfa6... but couldn't find median income.

Do you offer lower prices in low-income countries? On which measures do you base the reductions?

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