That's, like... I don't even know. Feels infantilizing to me. Or what am I missing?
The alternative would be to have developers manually specify prices for each region, which wouldn't really scale for a lot of developers (keeping track of exchange rates for 175 different regions is work). Or to do automatic currency conversion from {developer's native country here}, which would eliminate some of the manual work but lead to "ugly" prices in other regions (no x.00 or x.99 pricing), unless they had some rounding scheme to make them look nicer, and then you're almost back at the current price point scheme.
Frankly it doesn't matter what the exact price is. All economics are approximate.
Different story in places like Africa, where you often make a completely different app to contend with things like data caps and slow networks (e.g. Facebook Lite).
That's not true, where are you imagining this from? Hardware certainly doesn't cost the same, at the very least there are different VAT levels, but also pricing is adapted to the local market (literally just checked, i can get an Asus ROG Zephyrus G14 for 300€ less in Bulgaria compared to France). Software I'm unsure how to check, but Netflix costs varies by county.
This is insane. What prevents grey market arbitrage? Why wouldn't hardware from the country where hardware is cheapest immediately get posted on the local equivalent of eBay in the country where it is most expensive?
In any case I had no idea hardware margins were so squishy. For software, yes, profits are maximized by reducing unit prices where incomes are lower (since otherwise you won't sell any), but that's enabled by the fact that the marginal cost of unit production is very nearly zero and you're still making money even if you sell it for 25% of the rich-country price. That's obviously not the case for a laptop
Few things - mostly support and localisation support (e.g. the keyboard layout is different in iirc literally every European country, and most people want their local layout they know).
>Software I'm unsure how to check, but Netflix costs varies by county.
If it does (I don't think so, the minimal differences are because of VAT) you can subscribe from another European country (using a VPN or whatever) and Netflix can't ban you or block you from using it (like they would if you bought the subscription from a third world country for example)
Is it fair that both Finland and Italy pay 7.99€/month for the basic plan?
(This is why I said "in practical terms")
And thanks to another EU law if you subscribe to Netflix in one EU country, you get that country's Netflix Library everywhere in EU. So we can talk about "Swedish Netflix" and "Bulgarian Netflix" as two different services..
And there is no such thing as consistent, EU-enforced pricing. Get out of here ...
It sounds like the main North American market is subsidizing the apps being produced and sold worldwide.
Does the same logic apply for other virtual good such as digital music elsewhere?
There's a theory of surplus in economics, which is the extra benefit that someone gets from a transaction above what they would have been willing to pay.
If I buy a game that I would have paid $100 for for $50, then I have a "$50" consumer surplus. One the other end, if the producer was willing to let that game sell as low as $40, then they have a producer surplus.
Profit seeking producers want to capture as much as the surplus as they can, and they do this through price discrimination. You see this in product as two things that are essentially the same but with different marketing etc.,
Price discrimination based on geography is quite effective though as well. People with lower incomes aren't as willing to pay high prices for games. Countries can be effectively segmented based on geography (whether virtually or not), and through this producers can charge a higher price to countries with high incomes (taking away the consumer surplus they would have had vs a lower global optimal price), and still get some value out of consumers in lower income countries.
So it's not that NA is subsidizing the market, so much as it is the company trying to squeeze the most of everyone. Now, you could call it subsidizing in that there are probably products that wouldn't be brought to market without the NA market to pay for them, but that's not really "subsidizing".
It's a bit deeper than that, let me share my perspective of purchasing software in a developing country.
Growing up I remember that video games only picked up in popularity when you could "buy" pirated games. For reference, I'm talking about the Nintendo Wii era and those were about 1-3 USD each for a CD with the pirated version of the game. Also for reference, right now a Nintendo Switch game (that costs $60 MSRP in the US) sells for about $90 due to taxes and stuff [1].
To me, there's two significant issues with that: 1. People don't feel like they are stealing when buying pirated goods. They are spending their hard-earned cash into something they want/like, and that's as far as their reasoning goes. This happens for other software like Photoshop too, and even physical goods. I remember buying fake yu-gi-oh cards knowing they were fake, but that's the only ones that were available and that I could afford. I had a few legit ones and I treated them as a treasure, in the same way you treat your fancier clothes better than your normal ones. 2. You can have a full meal in a diner for about $3 in my country, desert and all. If you want to sell food, that's how low you have to go because that's what people can afford. A $10 dollar meal is normal in the US, but here it would be a luxury.
Now, that combination is very problematic as you can expect. People do want to pay for stuff, and to their minds that's what they are doing. To me, selling pirated goods is as scummy as it gets, but I cannot blame someone for buying it when it's their only choice.
So for most companies, having "regional" prices on this markets is the difference between selling or not.
[1] Not exagerating at all, google `700 GTQ to USD` and then this https://www.max.com.gt/juego-nintendo-switch-pokemon-violet-...
Yes. That's because they aren't stealing. It's completely normal to feel like you're not stealing when you're not stealing.
The copyright monopolists would very much prefer that you felt bad when you "steal" their imaginary property but the truth is nobody other than the politicians they lobby cares about their opinion on anything.
Any attempt at price discrimination should immediately result in arbitrage.
That's every product ever made for profit by a developer in a 1st world country. It's still essentially subsidizing even if you don't like the optics of the word.
It would be subsidizing if the effect were that Americans pay more so that people in other countries pay less.
But the alternative to Americans paying more isn't the other people having to pay more, the alternative is the product not existing. (or, alternatively, the company making less profit).
There might be some cases where if the US market didn't exist, the price in another country would go up, but it would happen because a company wasn't able to sustain a lower price with the reduced quantity, and would therefore have to settle for selling less quantity at a higher price.
I think you'll find that this has been the practice for many decades. A stark example is medicine pricing.
On the same note, why are Levi’s jeans $100 bucks in Europe, but $40 in the USA? They’re probably coming out of the same Asian factory. Not an economist but different value propositions I guess.
I’m sure sales tax is less in pretty much every US state compared to European countries, but it still doesn’t explain a $60 difference in price. It’s largely different price points based on different locales in accordance with what consumers are willing to shell out for the product.
Check out this brief description of how software proliferated in Poland during the early years of computers (3:09-8:27): https://youtu.be/ffngZOB1U2A
Yep. Even ad supported apps are subsidized by NA users.
You'd have to use a third party to remedy this but Apple handles it for you.
Apple handling price/international conversions and currency fluctuations seems immensely useful.
I think buyers are more accustomed to and comfortable with "round" or "standard" prices like x.99, x.88, x.95, x.00 etc rather than x.47 or x.31.
Heck, maybe they did do that, and this 900 price point system is actually the right way to do it. Doesn't seem like it, but maybe!
Because most developers are presumably experts in programming* and whatever the domain of their app is* (game, drawing program, whatever) and not experts in the psychology of pricing (unless it's a pricing app I suppose!).
Now so what? They could allow you to pick a predetermined price or type whatever integer you want into it. But I assume they think consistency makes for a better buying experience, and poor pricing choices are a kind of externality that affects everyone.
I'm slightly dubious of this "externality" really being bad but in this case I'll give the horde of Apple marketing researchers the benefit of the doubt.
* This is HN so the obvious snark has not been inserted
The other reasons for using the price point model are very convincing just not the appeal to Apple having a hoarse of marketing people.
For example, on the surface it seems redundant to have overlapping prices bands
$0.29-$9.99 in $0.10 increments
$0.49-$49.99 in $0.50 increments
$0.29-$9.99 in $0.10 increments
$9.99-$49.99 in $0.50 incrementsNot in anyway beyond simple math...thisnwhole scheme likely has more to do with ensuring and determining commissions that anything else.
> developers manually specify prices for each region, which wouldn't really scale for a lot of developers
while this also is more aligned to Apple's goals, unless there's also a proven and generalized (geographically and at all price points, app types) observation where the price looking beautiful as 0.99 massively offsets the actual revenue gains of being 1.23.
> "ugly" prices in other regions (no x.00 or x.99 pricing), unless they had some rounding scheme to make them look nicer,
Isn't this change an introduction of those ugly prices? If I'm reading the new rules correctly, Apple now supports prices like 7.39 or 37.40. I guess they don't end in a 1-4 or 6-8, but they aren't the cleanest numbers either. And if that last digit is really the problem, rounding to the nearest 5 is always a possibility.
Developers can go in 10c price steps from $0.29 to $9.99 (0.39, 0.49, 0.59, etc), or in 50c price steps from $0.49 to $49.99 (0.49, 0.99, 1.49, 1.99, etc), etc OR developers can use the 4 supported conventions for any price in those ranges, as long as you fit within the convention.
But you cannot start at a supported convention and then use the price steps.
Apple loves design and beauty. Crisp numbers and stability are more user friendly and aesthetic.
TLDR; if it works don’t touch it.
Your answer may be factually true but it is logically flawed.
Unless there is some marketing value here I suspect it has more to do with making sure they don't lose a half cent of commission rather than benefiting anyone else in any real way.
Here seems make some sense.
e.g. a 1USD price straight converted to the currency could be too high in a weak economy, so the actual price would be set at 0.7 or 0.5 usd
Another interesting thing: Apple’s price tiers are anchored to the US dollar. Even though I am a German developer, selling only to German speaking people in the EU, I have to adjust my price tier if the USD/EUR exchange rate is changed by Apple. They check for this roughly once per quarter.
In any case, actually probably have such rules, just not public. I am sure they have sales people being paid full time to agonise over such issues.
Prices on eBay actually look like something a human would choose. On AliExpress on the other hand the prices are all over the place, with really odd numbers of cents, which I assume comes from automatic conversion from whatever currency they initially priced it in (not necessarily dollars at that point).
Crazy.
And as Apple demonstrated in Netherlands with the dating apps it is actually cheaper to use them that try to run your own payment system. Especially if you're trying to target a global audience.
That sounds interesting! Can you share a link?
Apple sees themselves as a storefront not a payment processor, so maybe the idea is to make things look more consistent as you're scrolling through or comparing multiple apps.
This description may help:
>Developers can set a base price for a storefront and currency they know well, and they will see autogenerated suggestions for prices for other regions and currencies—which they can either accept or replace with their own chosen prices.
https://arstechnica.com/gadgets/2022/12/apple-announces-swee...
But originally the App Store was leveraging their existing payment infrastructure e.g. the one they use for iPhone sales. Purchases and invoices were done through SAP which was manually configured to support those price points. It's why you saw weird behaviour e.g. invoices for free app "purchases" and largely the limitations of that system drove what they could and could not do.
Perhaps they've done an overhaul for this system or migrated to a custom built one which is what has enabled all of this new functionality.
Can I just say finding out that Apple uses SAP on the backend is just one of those things that shakes my world view.
1) It's one of the largest SAP deployments in the US if not the world
2) SAP (at the time) was the only one who could offer an ERP that scaled to do what Apple wanted.
Homegrown enterprise software is one of those things that sounds great until you realize you're re-inventing a lot of code dealing with regulations (tax/hr legal) that is other companies bread & butter so it's worth "paying their price" rather than getting it wrong and being on the wrong side of litigation/legislation.
I understand that Cloud specifically is switching to manage accounting using SAP, but most of Google runs via our own in-house systems.
Source: work at Google in payments. This is only my personal opinion.
OH YEAH, APPLE IS PROBABLY USING SAP ON THE BACKEND!!!!!!
NO WAY DUDE THEY WOULD NEVER DO THAT!!!!!!!!!
Good times.
I think they just like the simplicity and cleanness in the store. I like it as well.
Are you crazy? And miss out on yet another opportunity for Apple to rub their stank on something?