HN Explorer

Ask HN: How to set prices based on a countries wealth?

4 points by glaucon ↗ HN
I'm interested in offering pricing based on how wealthy a country is - so someone in Luxembourg would pay more than someone in Burundi.

I'm looking around for some figures to base this on.

I could use per capita GDP [1] but I'm not sure GDP is all that good a measure of how much spare cash an average person has so I'd be interested in any alternatives.

I'd be grateful for any ideas.

[1] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita#Table

----

EDIT: the text "... but I'm not sure GDP ..." originally read "... but I'm sure GDP ...", this was a typo.

7 comments

[ 4.1 ms ] story [ 27.9 ms ] thread
AnimalMuppet
How about a linear function?

Say you take the poorest country. Make it free there. So make the price something like P=aG-b, where P is the price, G is the country's per-capita GDP, and b is chosen so that P=0 in the poorest country. Choose a such that it gives you a price you think is reasonable in the richest country, and there you go.

glaucon
Well I like the mechanics you've suggested but I'd rather basis it on some other metric which more closely maps how much surplus cash an "average person" has in country X.
bruce511
Most people in most countries have no surplus cash. The vast majority of the people world wide (doesn't matter how rich or poor the country is) live paycheck to paycheck.

Pricing isn't about surplus cash, its about value. And a product may have a different value depending on location.

If something costs 1 week of wages then it can have less value than something that costs a year's wages. Conversely if you're asking me for a month's wages for something, it must have a lot of value for me to prioritise that in my earnings.

That is what the original question is trying to ask - how to price according to local value versus pricing against global value.

A Netflix account costs about 5 cups of coffee in the US, but about x days of labour in some countries. So a decision that is trivial for some, and life-changing for others.

booboofixer
The big mac index:

https://www.economist.com/big-mac-index

glaucon
Ha ! Good idea. That's the type of metric I'm after but, understandably, it only cover countries where McD'd operates and in world standards that's quite a small set. Still I think it's a pretty good idea and I will keep it in mind.
Leftium
https://www.roadtoreact.com/ used to adjust its pricing based on geo IP location. I think it used some SaaS to offer this pricing (based on GDP?) I browsed through the web archives around the time I found it, but couldn't find the dynamic pricing...

Since then, Robin switched to simple tiered pricing based on pure product levels. (Plus maybe Patreon?)

I think this might be the better approach:

  1. Offer your base product for a low price everyone in the world can afford (even free).

  2. Then offer people who can/wish to pay more the option to pay more, possibly with incentives/upgrades.
You can balance any incentives as you see fit.

Another option is to offer your product at a high price, then occasionally offer discounts so people who can't afford the high price also get a chance to buy at a price point they can afford.

I see two major issues with setting prices based on a country's wealth:

1. It can be "gamed." I used a VPN to check the prices of Road to React in other countries.

2. There are rich people in poor countries, and poor people in rich countries. So you risk excluding poor people in Luxembourg (like students, for example).

faangiq
I’d try getting someone to pay first.