Should app users in India be paying the same in-app purchase (IAP) prices as US users?
Why do IAPs in developing countries sometimes cost even more than the same offers in wealthier countries?
Which mobile games localize their IAP prices?
To answer these questions, in this article, we’ll explore the concept of localized IAP pricing, its benefits, and drawbacks, and how Apple and Google address these disparities.
What is Localized IAP Pricing?
Localizing IAP pricing means adjusting in-app purchase prices based on user location.
Instead of charging a flat price for app users across the globe, developers can localize IAP prices based on a country’s economic strength, purchasing power, currency, etc.
For example, a $5 IAP might be affordable in the US, but in countries where incomes are lower, that same price could be too expensive for the average user.
To adapt to users with purchasing power across the world, developers have the option to adjust their IAP rates. By matching prices to what their users can realistically afford, developers have a better chance of attracting more IAP spenders.
Benefits and Drawbacks of Localized IAP Pricing
In theory, localized IAP pricing sounds fair and makes perfect sense.
So, why is this strategy not widely used by developers?
To understand this better, let’s go over the main benefits and drawbacks of using localized IAP pricing in apps.
The key benefits of localized IAP pricing include:
- Better accessibility: By setting prices in line with the local purchasing power, your IAPs become more affordable for more users from lower-income counties. As a result, you can expect better IAP conversion rates in these countries.
- User satisfaction increase: As a result of improved accessibility, developers can expect better brand reputation and user loyalty across different regions.
- Revenue boost: According to Wappier, publishers can see revenue increases of 20% to 40% by localizing IAP prices.
Now, let’s take a look at the main reasons developers have second thoughts about localized IAP pricing:
- The process can be complex. Manually setting different IAP prices for different countries can be a complex and time-consuming process, with many factors to pay attention to.
- Exploiting lower pricing. There were cases where users used VPN or similar tools to take advantage of lower prices in other countries.
- User backlash from more expensive countries. IAP localization needs to be handled very carefully so users don’t feel like they are being overcharged.
Automatic Localization by Apple and Google Play
Both Google and Apple provide developers with tools designed to simplify the process of IAP price localization.
How do they work?
Developers set base pricing in one currency, for example, USD. Based on this, the platforms automatically convert prices into the user’s local currency while taking into account factors like exchange rates, taxes, and local economic factors.
However, the results of this automatic conversion often feel off.
One of the reasons for this is that European countries often have high taxes, which can lead to prices higher than those in the U.S. While this may not be an issue for users in Germany, it may discourage users in economically weaker EU countries like Serbia and Bulgaria from making IAPs.
Generally, automatic localization can be very helpful for simplifying the pricing process.
But, to make sure the prices are appropriate for users in different countries, developers can override these price points and make manual adjustments. For example, if a developer notices that a price in a certain European country is significantly higher due to taxes, they can lower it manually.
How Developers Manually Adjust Prices
If they want to fully control IAP prices across different countries, developers have to do some things manually.
The first step is deciding what economic factors to consider.
A lot of developers start by setting the prices for the US market, using the US GDP per capita as a benchmark, and comparing it to the GDP of other countries.
Others use more interesting methods.
For example, some developers use the Big Mac Index which compares the prices of a Big Mac in different countries to reflect the cost of living.
No matter which strategy you use for this, the point is to adjust prices to reflect local purchasing power.
After deciding on a pricing formula, developers use tools like Google Sheets to input and calculate local prices based on a base price and the comparison points.
One option is to enter these price points completely manually, by editing one price per country at a time, which can be very time-consuming. The other semi-manual method is to upload custom prices through Apple and Google APIs. This method can save you time but you’ll need to handle the complexities of each platform’s APIs.
Examples of Localized IAP Pricing
Let’s take a look at two different strategies of localized IAP pricing in two mega-popular mobile games.
Pokémon GO
Looking into mobile games that localize their prices for players across the world, one example that caught our attention the most is Pokémon GO.
Pokémon GO adjusts the price of its in-game currency PokéCoins, based on the user’s location according to local purchasing power.
So, for example, while US players pay $0.99 for 100 PokéCoins, Indian players will pay ₹29, which translates to roughly $0.35 (SensorTower, iOS data).
This significant pricing difference makes the game more affordable for players in different countries, boosting worldwide accessibility and user satisfaction.
Candy Crush Saga
Candy Crush Saga also uses localized IAP pricing, but here, there are only minor price differences between countries.
For example, for US players, a pack of 10 Gold Bars costs $1.99, while users in the Philippines are charged ₱99.00 ($1.76) for the same offer.
The majority of game developers prefer keeping price points similar across regions, so they often choose this type of pricing localization.
Localized IAP Pricing: Final Thoughts
That’s it — hopefully, this article has helped you understand how localized IAP pricing works, along with its main advantages and disadvantages.
Is it worth the hassle? This depends on what you want to achieve. If you want to make your app more accessible and boost worldwide revenue, localized IAP pricing could be worth the effort.
