Question

Topic: Strategy

Change Of Pricing From Euro To Us Dollar

Posted by Maark on 1/26/2015 at 2:48 PM ET 250 Points
We are small software company from the Netherlands and we are thinking of partnering with one of the US companies to go after the US market. The situation is that our prices currently are in Euros, of course, and we already have US customers, but we would like to change the pricing to suit US customers better, so US prices.
We have 3 version:
A - 599 €
B - 999 €
C - 1999 €

Now, if we change the prices of US customers (they will be redirected from our page to US based page) by current Euro/USD conversion rate the prices would be:

A - 675 $
B - 1125 $
C - 2250 $

Now these prices are the same, but look more expensive from standpoint of a US customer looking at prices on website. The research on websites show that if you show 999 and the currency doesn't matter, since this is the first impression customer gets - before he realizes it is bigger number in the local currency (US, CAD, AUD ...) he is already decide to buy the software and only a few don't actually cancel the purchase when they find that on purchase page - if they change the currency.

So, it is all about the price number... any suggestions what to do? Anybody had similar situation, fears of not being able to sell at the same prices because of Euro/USD conversion rate?

If the Euro/USD conversion rate gets back in favor of Euro, the USD price number will be even higher.

Thank you
Maark
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RESPONSES

  • Posted by Gary Bloomer on 1/26/2015 at 2:56 PM Member
    Bill at US dollar rates.
  • Posted by Maark on 1/26/2015 at 3:42 PM Author
    Thank you for your suggestion. We will bill at US rates, but we are just a little concerned how will bigger numbers affect online purchase. So, we can either lower the US rates, but this will lower our revenue. We would like to hear if anybody had same concerns and how they addressed them.

    Thank you
    Maark
  • Posted on 1/26/2015 at 3:44 PM Accepted
    I agree with Gary. Use the USD number and hold it unless/until the USD/Euro exchange rate becomes dramatically different.

    This does underscore the importance of highlighting the unique benefit your software provides. Of course, you should always do that, but when you are sensitive about the price striking a prospect as being high, it's especially important that you communicate the benefit, so that price is less of a factor in the purchase decision.

    If a prospect believes your product is worth 10 or 20 times as much as it costs them, the difference between a price in Euros and one in US Dollars is trivial.


    P.S. I did deal with this issue for a client and the issue then was the US versus Canadian dollar. Gave same advice then, and it turned out to be the right move for that client. In fact, they thanked me for reminding them of the importance of advertising and stressing their unique benefit. Business in both countries improved. They had become totally focused on pricing in the face of new competition. (That's the short answer!)
  • Posted by Gary Bloomer on 1/26/2015 at 6:37 PM Accepted
    There are two kinds of customers:

    Price resistant and price averse.

    If the service and outcome ease give a greater overall feeling of well being than the cost of the service, price ceases to be an issue. If price REMAINS an issue, perhaps this customer ought to look elsewhere. Higher prices attract more determined, more success-focused clients while scaring off the riff-raff.
  • Posted by Peter (henna gaijin) on 1/26/2015 at 7:58 PM Accepted
    I also agree. Having your customers buy in a non-US currency is likely a larger impediment to them buying than a non-9 ending number. This may be stopping people from considering the product before they get to that point the web research you mention talks about.

    There is the option of making the number the same, at the expense of you making less money off of one customer than another (for example, charge $599 for the 599€ product). This likely would cause some people to start gray marketing the product in order to get the price of the lower country (in this case, buying in the US and exporting it back to Europe). Unless you have some way to lock this out (and the customer would likely find a way around the lock anyway), you would have large issues related to this.
  • Posted by Jay Hamilton-Roth on 1/26/2015 at 9:23 PM Member
    What is your US competition charging for similar software? How do you stack up against them? You could charge the higher-price in the US, but offer for new US customers a 2nd year of support (for example) for free.
  • Posted by Maark on 1/26/2015 at 10:36 PM Author
    Excellent comments, suggestions to think about! I came to the conclusion that the price is set as it is, US customers are already buying from our website, even though the prices are in €. So, we will just convert prices to $ and that's it! The value is there, for sure!
    Direct competitors, we don't have, it's a niche product. Maybe a different pricing structure is to be set, will think about it.
  • Posted by Maark on 1/28/2015 at 11:46 AM Author
    Thank you, all! Some great comments and suggestions!
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