February 3, 2011 | by Andrew Kameka
No, you didn’t misread the title. Google’s decision to let developers set pricing for different currencies will have the seemingly contradictory effect of making app purchases more expensive and more affordable. But how can such a change elicit two opposite responses at the same time?
The simple answer is that this change puts price control at the mercy of a developer’s decision rather than an exchange rate.
The Android Market currently allows developers to price apps according to the currency used in their home nation, but the new system will allow devs to charge someone in Japan a different price than someone in Mexico. This could have the effect of making apps more sensibly priced for some and more out-of-reach for others.
A game developer in the United Kingdom can currently sell his app for £5, which is reasonably-priced for British gamers. But the comparative strength of the pound versus the weaker U.S. dollar means Americans will pay more than $8 for the same game. This might cause a developer to lower the price to £3.40 ($5.50) to make the game more affordable, but he or she could just as easily stand firm at the higher price and alienate customers.
Currency-specific pricing will likely lead to more expensive apps for users with strong currencies. If a developer no longer has to set one price to balance between buyers in different nations, he or she will have no incentive to price the app in a way that encourages purchases from everyone. Instead, the game will cost the full £5 for British buyers because the developer can still charge American buyers $5. Of course, this could also have the effect of making more affordable apps. The game that was once €1 can now be set at $1, which will save the buyer 38 cents.
A developer has the option to set a different price for the Japanese Yen, US dollar, Mexicano peso, Swedish krona, or any of the other currencies supported in the Android Market. Google plans to deliver this option to U.S. developers first, but other nations are to follow. In the coming weeks, we’ll see how many developers across the globe decide to take advantage of the new currency options and how that affects affordability of app purchasing.