How I increased revenue by offering purchasing power parity pricing
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 $8190. Out of $8190, 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 $37394, a 320% increase in revenue.
Out of $37394, $5815 was from countries with lower PPP values, and $31579 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.