Ask HN: Which Currency to charge in?

4 points by willheim 15 years ago | 10 comments

First a bit of background: I'm a Canadian, living, operating, and incorporated in Canada who will be charging $X/month for my service. Monthly expenses such as hosting are all US based and charged in $USD.

When it comes to charging should I tow the GAP and charge in $USD or go for $CAD? Only advantage to me in charging in $CAD is that I avoid currency fluctuations on the revenue stream as opposed to charging in $USD and converting to $CAD. For those who do not realize it, the $CAD is around $1.04USD right now whereas it has been as low as $0.65USD in the past decade. So as you can see, from a cash-flow management perspective, a bad exchange rate could be quite damaging to the business (OTOH a great exchange rate could be a boon).

To other Canadian operations: What do you do to manage the currency fluctuations?

anigbrowl 15 years ago |

Charge USD. Anytime I see a bill in CAD I immediately start worrying about conversion rates and possible customs charges, and if I can get the same thing for within 5% by doing a USD transaction I will.

willheim 15 years ago | |

Funny... I live with the conversion issue almost every day. Something we Canadians (and I suspect everyone doing online transactions) have just gotten used to. That said, every barrier to an acceptance is one I want to eliminate. Thanks for the input!

anigbrowl 15 years ago | | |

I don't mean to say that it's a rational objection! Apart from a couple of annoying customs charges (because the sender didn't fill out a form correctly, forcing me to pay import duties on already-taxed goods bought from Canada), I have never had any actual problems purchasing from Canada rather than within the US. And for that matter, I'm not even American myself, so it's not based on some unfounded fear about the outside world. I've just gotten lazy and begun to assume that there will be some sort of unforeseen additional cost later, or that relative currency values will have drifted since the last time I looked and I will wind up paying more than I anticipated, or...something. If I'm hesitating over it, I'm guessing a good many more are.

sycren 15 years ago |

If you were using paypal then it would allow the user to pay in any currency and in a way increase the target audience and wouldn't possibly put a buyer off.

If you are worried about currency fluctuations, would it be possible to have a US bank account which profit would enter which would then be used to pay for anything US based therefore decreasing risk when converting $CAD to $USD? If so, then you would only transfer money to $CAD when the currency rate falls into a certain range for example 0.95-1.xx

willheim 15 years ago | |

So are you suggesting different amounts depending on the currency and the location of the enquiry IP? Example: $30CAD, $30USD, 18EUR, 2600Yen?

That's something to think about. Have you done that or know a service that has?

sycren 15 years ago | | |

Sorry I have not done anything like this before. Through paypal, I meant that you would charge say $10CAD on your site, when the user logs in to their account, the charge is automatically charged in their currency. But this wont be displayed on your site, only a figure of $10.

It really depends what kind of a service you are giving, in what quantity and how often you need to transfer it back home. For example paypal and many credit card companies take a small percentage of the transaction. Google checkout is another solution to this. If you only transfer the money once per quarter then you may save money when converting currencies

HerraBRE 15 years ago |

I'm operating from Iceland (http://pagekite.net/), and decided to simply let the user choose: I offer prices in USD, EUR and ISK. The prices are roughly comparable, but I don't bother making them match exactly - exchange rates fluctuate too much and I figured it was more important to be user-friendly by offering stable, understandable prices in a currency the user is comfortable with.

We launched so recently that most of our users are still working through their trial period, so I haven't actually gotten many sales or much feedback on the system yet. So I can't say how well this is working in practice.

I'd love to know if people here think this is a good or a bad strategy, and why.

ashleyw 15 years ago |

As someone who lives in the UK, I almost see dollars as monopoly money, I just can't easily interpret the value properly. For example, if something I wanted was $10, I'd snap it up, whereas if it was £5 (~$8), I'd think twice. You'd think it would be the other way around given that each pound is worth more than a dollar, but I guess you just give greater value to the currency you use everyday.

Though I wonder, would you generate more sales selling a product for £6, than you would selling it for $9? And could you switch your pricing from $9 to £9 (~$14.71) and maintain a similar conversion rate?

willheim 15 years ago | |

Businesses do that every day. Look at the price of a book which often has two or more currency prices on it. Of course, what happened here in Canada is that stores started offering discounts or "US Pricing" models when our dollar went up. If we're to nitpick we're talking physical items which have associated local costs involved (local staff, local vendor space leases, local energy costs, etc.) whereas here we're talking electric bits and bytes. However, in sales and conversions, it's all the same... no?

I have to admit, I was looking at Grahl Software's PDF Annotator which is listed at $69.95USD but when I went to the site it said C$79.95 (using my IP to give me a price). Did I convert? No. I was turned off. That's 19% more expensive than if I used a US IP. I've a feeling, only from my own experience, that different currency prices in a flat-earth internet environment is a big turn off for consumers.

fleitz 15 years ago |

If most of your costs are USD and most of your clients want to pay USD why not open a USD account with your bank and be done with it?

Figure out the most fluctuation you could handle and put a note in your TOS that you will adjust the pricing based on USD/CAD exchange rates if they go outside of a certain window. Alternatively, you could bypass this calculation and just purchase a CAD futures contract from your bank.

Seriously, worry more about getting customers than how the USD/CAD exchange rate will vary over the next year or two and you'll do fine. It's more likely that the CAD will go to .80 than 1.20 because Canada exports 80% of it's goods to the US and a devalued currency is better for exporting countries.