How do you handle pricing for different currencies?
I was wondering how to handle different currencies and their pricing (mostly, the 'main' ones, $ and €).
Let's say you're running a SaaS within the US and you have clients in Europe.
Do you :
- Set your prices in $, and simply apply a conversion rate whenever a European client comes ?
- Set different prices (for example 20$ vs 10€) ?
- Set the same price, so 20$ vs 20€ (which is quite ok because $ and € have a similar rate) ?
- Any other way ?
Of course we can't handle all the currencies, and the question is quite different for very weak currencies (that generally comes with low buying power), but concerning € and $ I'd really like to know the way you go :-)
From my experience in building & selling software for 10+ years I can wholeheartedly say that:
Here's why:
If you're from the US you pay for most if not all of your expenses (rent, salaries, taxes, computers, servers) in USD so you need USD.
Any other currency that you charge in will have to be converted to USD because you have to pay for all of the above. Depending on who makes the conversion for you you will loose 1-2%, that's almost half of what you pay Stripe.
Any kind of reporting operation like daily/monthly/annual sales is a lot harder because you have to account for the daily evolving conversion rate. We used to have our own reporting but it never matched the payment processor's reporting because we accounted differently for the exchange rate. Our accountant also used a different exchange rate so we worked with 3 sets of numbers. Try explaining that to someone who is interested in buying your company.
How much you made in a month will always be a moving target. Measuring monthly growth now depends a lot on the EUR/USD conversion rate.
VAT, refunds, chargebacks & discounts in 2 or more currencies complicates all of the above.
Pricing and correctly understanding and implementing a payment method is hard enough. As a start up you do not want the extra load created by having to deal with 2 or more currencies.
It makes a lot of sense, especially coming from 10+ years experienced people, thank you !
I was sensing the added complexity of using several currencies, but I must admit that I didn't think about all these points... It's quite convincing !
Same. We've been running a SaaS for almost 10 years now and never ever charged in any currency other than USD. There's no upside to the complexity in 99% of cases.
I'm working with paddle.com now. They handle all the things.
Thanks ! I'll keep the link in my personnal FAQ as it could be a good solution when I'll face this question (I mean, when I'll face it for real, not just in my mind)
This comment was deleted 7 years ago
Oh ! You just made me realise that I forgot GBP among the strong currencies, sorry about that :-).
Given the current conversion rate, if $20=>£20 is accepted, then $20=>€20 should be also accepted as the gap is smaller. I think this is the simpliest way to go at the begining and will probably do that.
However, as you said there could be big differences within a single currency, so in the end having a price per country might be the only way to target them all. As it would add a lot of complexity, I'm glad that it's currenlty out of scope.
So to sum up, I'd say that solution 1) goes for a MVP, then 3) is the second step and 2) is the last one.
Now it seems so simple that I feel like I could have reached this conclusion alone... But as I haven't, thanks a lot !
This comment was deleted 7 years ago
This comment was deleted 6 years ago
You are right, USD has this advantage of being a reference. I guess I would use this currency for any MVP, unless it's only a national service.