How I Increased Revenue by 15% Just by Offering Purchasing Power Parity Pricing
Co-Founder
Last year I quit my full-time job to focus entirely on my side projects. One of my best selling product is an open-sourced JavaScript library called lightGallery.
I was getting visitors to my website from all over the world. But sales mainly were happening from the United States, Canada, and a few parts of Europe.
Because the pricing was US-centric and people from other parts of the globe could not afford it.So I decided to offer purchasing power parity pricing. Purchasing power parity (PPP) is an economic term for measuring prices at different locations.
Basically, it is a concept of adjusting your prices to make your products affordable for everyone regardless of where they live.
The results were excellent, and I started seeing more sales from emerging markets and developing countries.
Last year, In the first four months, I made a total of $8,190. Out of $8,190, only $512 were from countries with lower purchasing power. That is only 6% of my overall sales.
Now let’s look at the revenue breakdown after offering Purchasing power Parity pricing. In the next seven months, I made over $37,394, a 320% increase in revenue.
Out of $37,394, $5,815 was from countries with lower PPP values, and $31,579 was from countries with high PPP values. That is 14% and 86% respectively.
But in this, not everything is due to offering PPP pricing. In June, I released lightGallery v2, a complete re-write with more features included. And of course, it is contributed to the increase in revenue a lot.
But the Revenue share from developing countries has increased by 250%. Before offering PPP pricing, the revenue share from lower PPP countries was 6%, and it has been increased to 16% after providing PPP pricing.
Let’s take a look at the numbers. It was $102 per month before PPP, and after PPP, it became $830 per month.
This is an 800% increase in revenue from developing countries and a 15% increase in overall revenue just by offering PPP pricing
I included only stats for the last year to get a better idea in this post. It is performing even better this year, and I made $50K in the last seven months.
If you are selling a product with a global audience, try adding location-based pricing for three months. Results might surprise you. Tools like ParityDeals make it easy to set up localized pricing in just under two minutes. You don’t need to roll it out everywhere at once. Start with a few countries like India or Brazil and see the impact.
