Localization Benchmarks
This episode might reference ProfitWell and ProfitWell Recur, which following the acquisition by Paddle is now Paddle Studios. Some information may be out of date.
Originally published: April 18th, 2018
Main Takeaways:
- Cosmetic localization correlates to 30-45% higher growth rates than non-localized pricing.
- Market-based localization results in double the growth rates of non-localized pricing
- Nordic consumers are typically willing to pay 25-30% more than US consumers
- Consumers in the UK have 15-20% higher willingness to pay than the US
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To get right to the point, localizing and internationalizing your pricing is a quick win with significant growth dividends.
There are two types of localization - cosmetic localization and market-based localization.
Cosmetic Localization involves simply making sure the currency symbol of your price matches the currency of the buyer within their location - a buyer in France sees Euros, a buyer in the US sees dollars.
Simply cosmetically localizing your pricing correlates to 30 to 45% higher growth on a relative basis compared to simply putting all of your prices in the same currency. This is because people want to buy in their own currency and trust their own currency more than others.
Localization Correlates with More Growth
Interestingly enough, the best companies are taking localization to the next level with market based localization, which means actually measuring the willingness to pay in each region and charging accordingly. Buyers in France would pay the equivalent of $150, and those in the US may be paying only $100.
Companies that are using market-based localization are seeing nearly double the growth than their non-localized counterparts. This happens because even in a globalized world, each market is different with different densities, competitive environments, and the like.
On a generalized basis, relative to the U.S, the Nordics are typically willing to pay 25-30% more, the UK 15-20% more, and generalized Southeast Asia willing to pay 30 to 45% less. These differentials are an enormous opportunity for ARPU and volume.
Consumers in Different Regions have Different WTP
Great pricing comes down to understanding your buyers and utilizing that understanding to properly price those profiles accordingly. Localizing your pricing is an extremely quick win that every company should at least be doing at the cosmetic level.
Want to learn more? Check out our recent episode: How to Price a SaaS Offer and subscribe to the show to get new episodes.
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You've got the questions,
and we have the data.
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Each week,
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we dive deep on benchmarks
of the subscription economy that
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you just can't get any else?
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This is the profit well report.
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Hey, Patrick. From Runkeeper
here. Coming coming at you
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from, down the street
in Boston, actually at Boston
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Harbor, original site of the
Boston tea party? I'm curious.
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How does, localization impact
growth and willingness to pay?
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Thanks. John's starting
another revolution here.
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This is one of my favorite
and topics and pricing.
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So to answer John's question,
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we looked at just
over fifteen hundred subscription companies
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and nearly a million different
consumers. Here's what we
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found. To get
right to the point,
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localizing internationalizing your pricing
is a quick win
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with significant
growth dividends.
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There are two types
of localization,
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cosmetic localization and
market based localization.
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Cosmetric localization involves
simply making the currency
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symbol of your price match the
currency of the buyer within their location.
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So a buyer in France would see
euros and a buyer in the United
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States would see dollars.
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Turns out simply cosmetically
localizing your pricing
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correlates to thirty to forty
five percent higher growth on a
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relative basis compared to
simply putting all of your
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prices in the same currency.
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This is because people wanna
buy in their own currency and
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trust their own currency
more than others.
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00:01:16,175 --> 00:01:17,135
Interestingly enough,
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the best companies are taking
localization to the next level
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00:01:20,095 --> 00:01:22,015
with market based localization,
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00:01:22,015 --> 00:01:24,630
which means actually measuring
the willingness to in each
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region and charging
accordingly.
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Buyers in France would be
paying the equivalent of a
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hundred and fifty dollars while those in
the US would be a hundred dollars.
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Companies that are using
market based localization are seeing
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nearly double the growth
in their non localized
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counterparts. This happens because
even in a globalized
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world, each market is different
with different densities,
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competitive environments,
and the like.
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On a generalized basis,
relative to the US,
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the Nordics are willing to pay
twenty five to thirty percent more.
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The UK fifteen to
twenty percent and generalized
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Southeast Asia willing to pay
thirty to forty five percent less.
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This shows us an enormous
opportunity not only for higher
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r but also higher volume
in certain regions.
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Great pricing comes down
to understanding your buyers and
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utilizing that understanding to
properly price those files accordingly.
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Localizing your pricing is an
extremely quick win that every
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company should do at least
at the cosmetic level. Well,
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that's all for now. If
you have a question,
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shoot me an email or video
PC at profitable dot com.
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And let's also thank John
for sparking this research by
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clicking the link below to
share and give him a shout out.
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We'll see you next week.
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