Purchasing Power Parity

in Hacking Away

Purchasing power parity examples.

Something I’ve noticed recently is independent creators offering variable pricing depending on your country’s purchasing power. When I posted, I had a few questions in the back of my mind: how do they calculate the discounts? is there some library used to automate the feature? are they all drawing from the same thing? After several hours of research (read: tweet- and link-hopping), I have a bunch of awesome resources that might be useful for you, plus ways to implement PPP itself. Neat.

I’ve scattered screenshots throughout this article, because maybe you’re like me and want to see how they differ. If you’ll notice, some appear as sticky banners, in pricing tables, and in cart pages. Emoji vs. small icon vs. larger flag. Automatic vs. opt-in computation. Message copywriting and discount code text.

So many interesting choices to inspect and experience.

Who’s doing Purchasing Power Parity?

With my replies citing examples and who inspired them, followed by some more digging with the keywords “purchasing parity” on Twitter, it looks very developer- and JS-centric (probably because they have the chops to execute it).

Some links via Awesome PPP by Dewa Widyakumara, where you can contribute! If you’re looking for more mainstream examples, Bill My Pocket by Ru Singh compiles subscriptions with regional pricing, and even notes whether it’s a fair computation.

 

Who wrote about it?

Chris Ferdinandi, Wes Bos, Andy Bell, Julia Evans, and Zeno Rocha have posted what they did with their offerings, demystifying a lot of behind the scenes stuff. I’m not gonna parrot everything here, but what struck me was:

They were hands-on and subjective.

Both their deep experience with customers and their implementation show a very involved approach. Their calculation methodology was based on specific, personal reasoning that differed from one another. I emphasize this because it’s a complex question venturing into economics, philosophy, and even morality, but also business profitability.

“I don’t make my list public because I am not an economist and I don’t want to be in the middle of some sort of economics fight choosing what is fair.”

– Wes Bos

They mention charts one can reference, but in many cases chose a setup they had to be 100% comfortable with. That may mean following one of those tables to the digit, or it may mean devising a custom scale.

PPP actually increased revenue.

These are independent creators offering massive discounts (from their perspective—the point of parity is that it’s not equitable from other perspectives), relying mostly on the honesty system. But they experienced higher sales precisely because more people can now afford it.

Make a thing more accessible, and the customer base will grow.

Cosmetic vs. True Market Localization

You may have heard about the Big Mac Index, a popular explanation for purchasing power. Here’s a simpler calculator by Jack McDade. A more recent example would be differences in Netflix & Spotify subscriptions per country.

PPP is apparently framed as “true” localization. Whereas “cosmetic” localization does currency conversion from the same amount, “localization 2.0” adjusts according to market forces in a region.

“Customers won’t pay for your product in their currency – or any other – if the price is wrong. […] Your priority should be optimizing your price based on region even if you can’t support a country’s currency yet. Once the price is optimized for that geography, you’re in a position to make an impact in the market while you take steps to support the local currency.”

– SaaS Localized Pricing: What You Should Know Before Selling to New Regions by Harrison Rose

A cute little side note about automating localization

If there’s one piece of feedback I have to give about these notices, it’s that some countries expect an article before their name, such as the Philippines ;) This is not a big deal in the grand scheme of things, but if you’re looking to localize, probably get to know specifics like this too. (Technically disputed, but trust me when I say it looks wrong without it.)

SaaS and API to try

One of the examples led me to the discovery of Parity Bar by Danny Postma, an automated service that’s free for the first 10,000 pageviews. Interestingly, it expects you to turn off your ad blocker for it to work.

Parity Bar by Danny Postma

Also due to digging around, I’ve found out from one of the creators that major online payments player Gumroad has PPP in their roadmap; meanwhile, this discount code generator by Peter Jausovec might get the job done.

For those who prefer to roll around in more code, there’s this API by Robin Wieruch. Meanwhile, this WP plugin extension by Chris Ferdinandi intentionally adjusts pricing separate from discount codes, so customers can still participate in special occasion sales.

purchasing-power-parity.com by Robin Wieruch

The opposite of an automated service would be manually responding to requests for reduced pricing. This friction can be intentional, to ensure only those who really need it will put in the effort to ask. The disadvantage, of course, is managing the increasing volume as the business scales.

Beyond pricing disparity

Addressing pricing isn’t new: there’s scholarships, pay-what-you-want, bulk discounts, and incentivizing sectors more specific than non-profit or education.

The point is that while globalization and technology (or a pandemic?) supposedly set out to bring the world closer, they also highlight the gap in privilege and purchasing power—and even widen that.

Pricing, as Christian Nwamba points out, is also not the only difficulty certain people and countries have to deal with. The idea of attending a conference or flying to another country may be simple for some, but not everyone has it easy applying for visas, booking flights & accommodations, or being a stranger in a community or city—and all the logistical, financial, & mental burdens that come with that. This inspired him to start a conf of their own, Concatenate. (A familiar story if I ever saw one.)

And it can even be something as trivial and oft-overlooked as payment options. As someone who’s dealt with payments for events, and is all too familiar with the state of e-commerce in the Philippines, I know how inaccessible a product/service can become if you only offer online payments. We always have to offer bank deposit and similar options you can’t automate.

Even with online events, the barriers to entry may look different, but are still very much present: internet speeds, device capabilities, time zones, and distractions & responsibilities at home.

We need a continuous, sustained conversation around areas of inequality that can be improved, need to be improved. Some are more difficult than others, but for the Web, its DNA is to be as accessible and inclusive as possible. Parity is another way to manifest that.

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made in the Philippines by Sophia Lucero.