Day 782 - Purchasing power parity - https://golifelog.com/posts/purchasing-power-parity-1676945322213
Does activiating purchasing power parity really help with (revenue) growth?
Heard a lot about the upsides... But what might be some downsides for indie solopreneurs that few talk about?
I asked that [question on Twitter](https://twitter.com/jasonleowsg/status/1626523347772407808) and got a great discussion out of it!
Here's a summary on the potential pros and cons:
**Upsides:**
- It's not about revenue but access. PPP allows your product to be more inclusive and equitable to everyone around the world.
- Good for brand and reputation, as it's seen as a kind gesture for folks from countries with weaker currencies.
- Brings in more sales and gross revenue you would otherwise not have, even if it's a smaller margin.
- PPP makes more business sense where the costs of replication is zero or very small, e.g. digital products. Services or physical goods might requires more analysis to make it worthwhile.
**Downsides:**
- Abuse by tech savvy customers who know how to use VPN to buy via countries with better exchange rates. The question is, would this be in the small minority? Or are your customers that tech savvy that there'll be widespread abuse? Re: Gumroad (which I use), thankfully, they require a credit card from the same country of the geolocation address, so that helps make it harder to abuse.
- Dilution of your brand and erode the perceived value of your product if it's cheaper. But it's relative to income levels of those who need PPP, so it's a toss up.
- You attract a different group of customers who might have different support needs/load, types of questions etc. It will have to be worthwhile for you to support that. Customers asking 100 questions before buying, requiring a call, etc, might not make it business sense.
- Sense of fairness. Would those paying full price feel that it's unfair, or that they are subsidizing people in other countries? How would that perception of fairness influence their decision to buy? They might not even be aware there's PPP to start with...
- Might not be financially worthwhile depending on your product and business model. If server costs increase with increased usage (e.g. generative AI apps), then PPP might cause a loss. Have to account for cost per user, even at the lowest PPP rate. If your business model is more service-related, like say, consulting/freelance, or customer/tech support that's manpower/time-intensive and constitutes a huge part of your delivery, then PPP might not make sense.
- Taxes and fees for certain foreign currencies. There might be additional tax and conversion/processing fees that payment platforms will charge you when customer buy from those countries. On top of that, you'll also have to handle tax compliance in more countries = more complexity. If sales volume is high, it might be worth it.
*What else did I miss?*
Heard a lot about the upsides... But what might be some downsides for indie solopreneurs that few talk about?
I asked that [question on Twitter](https://twitter.com/jasonleowsg/status/1626523347772407808) and got a great discussion out of it!
Here's a summary on the potential pros and cons:
**Upsides:**
- It's not about revenue but access. PPP allows your product to be more inclusive and equitable to everyone around the world.
- Good for brand and reputation, as it's seen as a kind gesture for folks from countries with weaker currencies.
- Brings in more sales and gross revenue you would otherwise not have, even if it's a smaller margin.
- PPP makes more business sense where the costs of replication is zero or very small, e.g. digital products. Services or physical goods might requires more analysis to make it worthwhile.
**Downsides:**
- Abuse by tech savvy customers who know how to use VPN to buy via countries with better exchange rates. The question is, would this be in the small minority? Or are your customers that tech savvy that there'll be widespread abuse? Re: Gumroad (which I use), thankfully, they require a credit card from the same country of the geolocation address, so that helps make it harder to abuse.
- Dilution of your brand and erode the perceived value of your product if it's cheaper. But it's relative to income levels of those who need PPP, so it's a toss up.
- You attract a different group of customers who might have different support needs/load, types of questions etc. It will have to be worthwhile for you to support that. Customers asking 100 questions before buying, requiring a call, etc, might not make it business sense.
- Sense of fairness. Would those paying full price feel that it's unfair, or that they are subsidizing people in other countries? How would that perception of fairness influence their decision to buy? They might not even be aware there's PPP to start with...
- Might not be financially worthwhile depending on your product and business model. If server costs increase with increased usage (e.g. generative AI apps), then PPP might cause a loss. Have to account for cost per user, even at the lowest PPP rate. If your business model is more service-related, like say, consulting/freelance, or customer/tech support that's manpower/time-intensive and constitutes a huge part of your delivery, then PPP might not make sense.
- Taxes and fees for certain foreign currencies. There might be additional tax and conversion/processing fees that payment platforms will charge you when customer buy from those countries. On top of that, you'll also have to handle tax compliance in more countries = more complexity. If sales volume is high, it might be worth it.
*What else did I miss?*