Question

Topic: Strategy

How To Price A Global Online Service, With Higher Pricing In Some Markets Than Others

Posted by Anonymous on 2/18/2004 at 10:26 AM ET 250 Points
I am launching a global news broadcasting service. Our award-winning journalists will originate and distribute video-led news to consumers via direct and indirect broadband Internet. Consumers will buy the product via subscription or pay per view from our website or indirectly from web or mobile portals.

Traditional broadcasters are structured to package news into simplistic & over sanitized 2minute sound bites for a mass-market audience. However, an increasingly news hungry international minority is emerging, which is dissatisfied with this presentation and content. Without giving too much away, we shall be providing material that other broadcasters cannot and will not be able to show.

We have carried out independent market research in the UK which has shown significant interest in the product and preparedness to pay £4.95 per month as a subscription. Ideally we would charge a similar price in the USA, Europe and Asia, but given the exchange rate, believe that $6.95 would be as high as we can get away with in the USA, and even this may be too high. How should we market and sell a global online service, with the same product at different prices in different parts of the world, without irritating consumers and destroying the brand? Yes you can ensure that people provide their credit /debit card address and thus are obliged to pay the specific regional pricing, but they will see immediately that there are significant price differences. Can anyone provide examples of successful online brands with very different regional price structures and a similar product?

The USA should become our largest market and therefore getting the pricing right is critical. Although we are providing unique content, i am conscious that the WSJ only charges $79 per annum, which is $6.58 per month and CNN charges $4.95 per month for its video service.
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RESPONSES

  • Posted by Blaine Wilkerson on 2/18/2004 at 11:57 AM Accepted
    Well, diferent prices from different regions is not uncommon.

    Furthermore, why must one see what it costs in Asia or the UK? Personally, If I am directed to a "check-out" page and have to select my country, the last thing I do is click on all the other 1000 countries to compare prices!

    In addition the currency quoted would be different and unless you are an automatic currency converter, you won't be able to tell.

    My suggestion is to perhaps have them slecect a region FIRST, then restrict the pricing listed on the following pages to that region. That way nobody can whip out ther currency converter and see if they are getting charged a dollor more than some guy in Japan.

    You have a valid concern, but with a very unprobable detriment. Personally, I don't care to compare what other countries are paying for the product I'm buying....I'm more concentrated on getting it ordered! I believe others follow and/or agree with my statement.

    As far as Competing with WSJ and CNN, looks like you already have that covered! You are introducing something useful that they dont have! Competition is good for business. It would be interesting to see WSJ and CNN get "engaged"!! Plesae send me an email describing your service once launched...I'm very curious amnd may become your first customer!

    Want some exaples of how different pricing in different regions did not destroy a brand?

    Playstation2, Nintendo, Xbox.

    BMW, Mercedes, Jaguar, Ferrari, Porsche, Ford

    Polo, Gucci, Versacci

    The list goes on and on!

    Good Luck!!!
  • Posted by Blaine Wilkerson on 2/19/2004 at 2:50 PM Member
    I agree with the others and still stand by my original comments.

    As Michele pointed out, even if you have branch servers in in each region, the costs of bandwith differ. It is just par for the course for a global launch...regional pricing will differ and people know this.

    Even us spoiled Americans!!! LOL!!!
  • Posted by Chris Blackman on 2/26/2004 at 11:14 PM Accepted
    International pricing parity is a very interesting subject.

    The Economist publishes a "Big Mac Index" which compares the price of a Big Mac between various countries, assumes that they should cost the same, and looks at the relative disparity between the actual and the implied exchange rates.

    The page at The Economist is https://www.economist.com/markets/bigmac/displayStory.cfm?story_id=2352137 but requires premium membership. You can see the 2003 data here https://www.licenseenews.com/news/news188.html which gives you the idea.

    This "Burgernomics" theory has recently been tested with a new, parallel variant theory. "Lattenomics" uses the price of a Starbucks tall latte to compare currencies - click through to https://www.economist.com/markets/bigmac/displayStory.cfm?story_id=2361072 which you can access without premium Economist membership.

    Summary - things ARE priced differently by market. Don't worry about it. If a Brit buys the US product they'll pay a marked-up charge on their credit card for the exchange anyway, so paying the local rate may be safer than taking the exchange rate risk.

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