Thank you for clarifying this. This is such an Apple thing to do.

Frankly it doesn't matter what the exact price is. All economics are approximate.

I don't think that's a bad practice. I'm Russian and Steam games are (were) 1.5x-2x times cheaper for Russia compared to Europe and Americas, even before regional passes. I don't know whether that was responsiblity of devs or storefront, but it seemed quite a fair and profitable practice, because the price point you are willing to pay for a game (or an app) is different for people from different economical and cultural backgrounds. You aren't getting a game for 80$ if your monthly salary is 300

The economics of all of that seem sketchy to me.

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?

Entire reseller websites (e.g. g2a) of games and software alike have popped up trying to profit from this arbitrage opportunity. You buy games in Russia and an American scoops up the license key for a little more, it’s all automated too nowadays.

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.

EU and the USA doesn't have free trade in the pants category

Neither does Vietnam (one of the places Levi’s are produced nowadays) and the US, the pants are imported and duties are levied regardless of whether the pants are sold in Europe or the US.

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.

> the main North American market is subsidizing the apps being produced and sold worldwide

I think you'll find that this has been the practice for many decades. A stark example is medicine pricing.

It's not really. The US medical system has this tendency to inflate pricing in a cat-and-mouse system where drug companies and insurance companies try to duke out what is the "correct" price of a drug. Setting it too high and the insurers won't cover it, too low and the pharmaceutical companies are "losing" profits to insurers. It's a terrible feedback loop that hampers those who can't afford insurance because the premiums are too high because pharmaceutical companies know that in most cases insurers will pay.

I think youre missing several inputs into your feedback loop. The original statement about the US system bearing the brunt of development stands. It's also true that insurers influence the market. Both are true. There are also government inputs into the market, political inputs a d supply chain elements that all feed into this. The one stakeholder will little real input in the end consumer who gets stuck paying whatever the others have decided they'll allow...

That doesn't explain the behavior of off-patent drugs being jacked up in price on a whim or near identical variants being made to extend patent protection and maintain the predatory pricing of the name brand. Their development costs are already recouped during the initial patent phase. Tweaking things a little doesn't cost them nearly as much.

Yeah that's caused by the fda

I think it applied to DVDs in the past and was impetus behind region locking media. Also another way to look at it is less subsidizing and more maximizing profit by not leaving money on the table in foreign countries.

It applies to video games and software for sure. I think this is why it is almost always cheaper to buy a code online for something like a Microsoft product.

It isn't really subsidizing because the goods are virtual which means the marginal costs are minimal. There of course could be infrastructure costs to get up and running in a new country. However once that is done, almost all the marginal revenue developers get out of these additional markets is profit because there is practically no cost to selling an extra copy even if it is at an extremely steep discount.

Well, the economy of that is sketchy in that multinational corporations pay sometimes an order of magnitude less for the exact same job simply due to you living in a different country.

It's really the opposite, it's a form of price discrimination.

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".

>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".

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.

Subsidising would imply that they’re selling in other markets for a loss. They’re not, there’s no subsidy.

From popular internet knowledge, games are more expensive in Australia then NA (Including digital distribution). Would you say that Australia is subsidizing games for Americans?

If there were more Australians or if part of the money didn't go into government taxes

Depending on the specifics of the business model (e.g. is the marginal good sold paying primarily for the up-front investment, or for the per-item costs), you can sometimes call it "NA subsidizing everyone else", or in other cases "vendor overcharging NA customers because they're wealthier on average", or in yet other cases, "selling at the local market rate".

It's not subsidizing though.

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.

It is in the interests of North American consumers for the company to maximise it's revenue from other regions to help fund product development. Higher price points in developing countries would make the product largely unaffordable there, reducing revenue.

> People with lower incomes aren't as willing to pay high prices for games.

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-...

> People don't feel like they are stealing

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.

Excellent. So how do we figure out which regions have the lowest prices so we can pretend to be in that region? Because I sure as hell don't want to pay high prices while some other guy is paying peanuts.

Any attempt at price discrimination should immediately result in arbitrage.

It could also be said that the cost of compliance and the cost coming from the litigiousness of American consumers shouldn't be subsidized by countries where selling an app is monumentally easiest and cheaper.

Something else to consider is motivating piracy. If they sell a piece of software for a flat price in all geos, the ones who can't afford it will invest more time in pirating the software. As a side effect, piracy is normalized in those communities as a necessary way of life in the digital world. Naturally, their tools and methods will leak out to other communities and make piracy easier in places that CAN afford them. Devs would rather sell to those communities at a "loss" than ostracize them and deal with the fallout.

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

>It sounds like the main North American market is subsidizing the apps being produced and sold worldwide.

Yep. Even ad supported apps are subsidized by NA users.

This is fair. OTOH, you have the single European market (the EU forces games, apps, hardware, etc to be sold at the same price everywhere in the EU in practical terms), which has shafted poor countries-it's disgraceful that a Swedish costumer pays the same price for an iPhone than a Portuguese costumer while making several times as much money every month.

That's kinda messed up. ALL hardware?

No, they're mistaken, there is no such thing.

It’s not true. That guy doesn’t really know what he’s talking about.

> OTOH, you have the single European market (the EU forces games, apps, hardware, etc to be sold at the same price everywhere in the EU in practical terms),

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.

You can buy it directly from Bulgaria to save 300€ then. It would be illegal for the shop to tell you you have to pay more for buying from another country.

>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")

Netflix is kind of an exception to this because you're not buying the exact same service in each country, Show/Movie availability differs per country, but also some regional audio/subtitles availability differs per country (there's a language setting in your account settings but it doesn't have all the audio/subtitle languages netflix supports, even though the number of options has grown since last time I checked it...)

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..

> i can get an Asus ROG Zephyrus G14 for 300€ less in Bulgaria compared to France

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

> 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?

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).

Now I'm imagining keycap-replacement sweatshops :)

How can you fit that much misinformation into one comment? EU != Europe. Russia is not in the EU. Nor is it completely russian. Only a select number of countries in Europe is part of the EU.

And there is no such thing as consistent, EU-enforced pricing. Get out of here ...

Btw most of the Russia is not Europe even in geographical sense.

From what I understand, the Russian market has a lot of tech-savvy users but disposable income is lower. If you didn’t price your app for the Russian market, it was more likely to get pirated or cloned. Similar caveats in certain parts of eastern Europe. At least, that was the justification I’ve heard.

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).

It kind of does, no? Would you want your recurring charge to fluctuate randomly just because the developer converts everything to their currency? Or what about getting screwed over and being charged an exorbitant price because you live in a poorer country and the developer wasn't considerate enough to add regional pricing based on your PPP?

You'd have to use a third party to remedy this but Apple handles it for you.

Indeed. It’s a very smart thing to do. Basically a Big Mac index approach.

Disagree on that. Is Apple trying to arbitrage currencies at this point?

Not explicitly but part of their 30 percent cut is handling currency risk, yes.

It's a decision that actually benefits the customer and developer enormously. Imo an "apple thing to do" is to change chargers simply to make a profit.

Apple handling price/international conversions and currency fluctuations seems immensely useful.

I find it hard to agree with

> 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,

You would think a company like Apple could easily build a system that updated exchange rates daily and could do the simple math on any price. Having "price points" seems arbitrarily and stupid.

They could do that, but then users in some countries would have to pay 0.693 of their local currency or whatever. Why should the US be the only country that gets friendly looking prices?

Or just let the dev specify if they want to round prices to some precision?

I'm an American. I routinely buy things in GBP, EUR, and JPY and the amounts convert to an arbitrary number in USD. So what? It is displayed to me as 9.99 EUR. I understand I'm not going to have a nice, pretty .99 at the end of my credit card transaction.

I would expect that the vast majority of human beings very rarely buy anything in a currency other than that of their own country.

Yes, but you don't know that in the App store: you're buying from your "local" store regardless of where the developer is.

The point is that price points already are friendly-looking in every country. Price points are adjusted in each country, they’re not a 1:1 match with $USD.

Otoh, there's value in prices holding still for at least a while. And 'pretty' prices are appealing in general. You obviously can't hold prices still forever, but daily prices is probably not paletable.

Price points smooth the exchange rate fluctuation (how often should the prices be updated? Every second? More often?) and selects for prices that have certain cultural"gravity" as well.

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.

Exchange rate fluctuation I think could be handled perfectly fine without price points but the price point "gravities" is a really good reason to use the system. Not sure why it should limit developers to that system but it certainly makes the system attractive/useful for many.

> Not sure why it should limit developers to that system but it certainly makes the system attractive/useful for many.

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 problem with appeal to authority on this is the same could have been said last week about why it wasn’t like this. It doesn’t make it any more reasonable it just explains it is the way it is.

They were exactly like this just with fewer price points.

Understood but my point was the list changed to add price points not that they had no list at all. Hard to argue the price points are the only ones that should be used because Apple is the best at marketing if Apple themselves are adding price points.

The other reasons for using the price point model are very convincing just not the appeal to Apple having a hoarse of marketing people.

It's also obvious that you don't want the price to fluctuate between 99 copper-pieces and 89 copper-pieces every day just because the USD/copper-piece rate is somewhere around where 95 copper-pieces is the converted price - you would want periodic manual adjustments to the prices for each price point, taking into account all kinds of marketing aspects, not some automatic immediate response to any change.

It seems like every few minutes would be fast enough, but whatever. It's just weird that, given how important app store purchases are for Apple, they wouldn't just spend any amount of money to make the best possible system: do the currency conversion, snap to those behavioral psychology price points, round to the prettiest unit... the works. Wouldn't everything be on the table for the thing that makes so much money?

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!

Yes, that's precisely what the price point system is. I found it kinda weird myself, but upon reflection it makes sense.

But it is not just math. It is about what constitutes a cheap app for an East-European or to a Chinese person vs that of an American, and how that changes with time in relation to the currencies. I really don’t get this dismissive mindset, do you honestly believe that a trillion dollar company didn’t think of this one little trick that you figured out in a minute?

The fact that is seems stupid from the point of view of the creator is irrelevant. It's not about the creators, it's about the users. Apple simplifies incredibly complex systems into good user experiences.

It is stupid. The exchange rates are a rehearing here. It's likely just a marketing aspect, setting the last digits etc or wlensrluring they don't lose out on a half cent of commission somewhere.

Not to be that guy, but isn’t that like, what computers are for?

Knowing that Apple is pretty smart, I'm sure they use computers, but only update occasionally so prices aren't constantly fluctuating.

Apple loves design and beauty. Crisp numbers and stability are more user friendly and aesthetic.

Knowing apple, more likely scenario is that the systems are old and allowing such flexibility would be a Herculean task that needs a lot of investment with not a lot of upside.

TLDR; if it works don’t touch it.

>but lead to "ugly" prices in other regions

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.

7.39 should be possible as part of the 10c price step, but how would you get 37.40 out of the system? You could do 37.00, 37.90, 37.95, or 37.99 via the "X." ones, and the first category would all end in X9.

They say .50 price steps are possible in the 10-50 range so X.90 + .50.

So the way I read it is as two separate systems:

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.

Thanks for that explanation. Is that why the price point ranges overlap - does the increment you select tell Apple how much they should round by when converting currency?

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

Since 10 cent increments include 50 cent increments, so why not say:

    $0.29-$9.99 in $0.10 increments
    $9.99-$49.99 in $0.50 increments

"does the increment you select tell Apple how much they should round by when converting currency?"

Not in anyway beyond simple math...thisnwhole scheme likely has more to do with ensuring and determining commissions that anything else.

The alternative would be to have developers set their price point and currency then allow Apple to still do the international conversion rates. There is zero benefit in these conversions to only having preset price points.

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.

Since you seem to know a bit can you set which countries/regions have access say something like "only north america and Africa" ? Not an apple dev so I don't have a clue.

Yes. You can include or exclude regions and individual countries.

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.

Apple did its best to reduce the pain points. Sometimes by adding more like butterfly if they goes off course. But it is all about user or developer experience. Just not always on it. Intent is different from result.

Here seems make some sense.

This blows my mind, I never thought about that. I imagine automatic currency conversion would make it especially hard for any company outside US/EU. They'd stick out like a sore thumb with their weird prices.

There are also adjustment for the general price of things in the country.

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

The USD/EUR exchange rate varies as widely, if not more, than the USD/JPY, price points ensure a sort of strategic pricing in each region.

No. The alternative would be a button "apply current exchange rates to all prices" and an additional input field where you can override this price per country. This is how Amazon does it for Kindle self-publishing.

Of course that's the very Apple approach. Why not give them the option of using their automatic price adjustments rather than making people use it?