Microsoft creating its own biased exchange rate for apps in Marketplace

January 8, 2011 | By Surur

microsoftworld Likely in part in an effort to create nice round numbers for apps in Marketplace, it seems Microsoft has been unfairly inflating prices of applications all over the world, seemingly completely independent of the real exchange rate.

Sebastian Grey, the developer of Fierce Game Hunting for Windows Phones, wrote to Mobility Digest and revealed the strange game Microsoft is playing with the price of apps. His game costs $1.99 in USA, but the price varies widely all across the world.

Cost in USA	Country	Microsoft’s charge	Excess in $	Excess in %
$1.99	Australia	AUD 3.0	$0.98	47%
$1.99	Europe	1.99 Euro	$0.59	30%
$1.99	Canada	2.49 CAD	$0.51	26%
$1.99	Hong Kong	20 HKD	$0.58	29%
$1.99	India	110 Rupees	$0.43	22%
$1.99	Mexico	30 Pesos	$0.46	23%
$1.99	New Zealand	3.49 NZD	$0.65	33%
$1.99	Singapore	3.49 SGD	$0.70	35%
$1.99	Switzerland	2.5 CHF	$0.61	30%
$1.99	UK	1.99 GBP	$1.09	55%
		Average	$0.66	33%

So on average an app is 33% more expensive in the Marketplace outside of USA, in spite of USA generally having a higher disposable income per person, and some countries such as Australia and the UK pay an outrageous 50% more.

While some may say Microsoft is building the cost of doing business overseas into their prices Microsoft is a global company, and that excuse does not fly with me.

How do our readers feel about being ripped off by Microsoft? Let us know below.

About Surur

Site Admin and Windows Phone enthusiast, he has been using Windows Mobile devices since before they were called PocketPC’s. He is currently sporting a HTC 7 Trophy.

Tagged marketplace, microsoft, windows phone 7

Matthijs

You could also reverse it. All apps are 30% cheaper in the US and almost the same price everywhere else.

http://www.facebook.com/nizzon Johan Nilsson

And if you compare to the apps on Iphone and Android?
http://www.facebook.com/nizzon Johan Nilsson

And if you compare the prices to the "same" apps on Iphone and Android?
A colleague of mine has both Iphone and WP7 and he has been complaining about the apps beeing expensive.

http://www.facebook.com/barry.allott Barry Allott

beeing ?

http://twitter.com/chmun77 @chmun77

being, he meant.

Travis

Kinda annoying that living in Australia our dollar is basically the same as the US sometimes a little higher. Kinda a kick in the balls considering we pay the same for Xbox Gold but don't get any of the Hulu or Netflix features that the US enjoys.

http://www.facebook.com/profile.php?id=100000096491109 Mj Williams

AUD carries 30-50% less weight than the dollar in most cases, as well as small size of continent leads to increase pricing…
everytime I go to oz, the exchange vs the dollar always leaves me not spending nearly as much. So I can definitely say for OZ, the AUD is not the same as the USD. Everything is flipping expensive there even a TI83plus that is like 50 dollars here in US (if that), in oz it is still 129 AUD. WTF

bitslave

Except we're not talking about purchasing physical goods, we're talking about digitial downloads that don't have any warehousing or physical shipping/handling costs involved.

There's absolutely no reason why digitial downloads should not cost exactly the same base price * receiving country's exchange rate + exchange fees as they do in the country of origin.

The nature of WP7 means it's an international product being sold in the international market so international rules apply.

Lars

"Kinda a kick in the balls considering we pay the same for Xbox Gold but don't get any of the Hulu or Netflix features that the US enjoys. "
Same is true for Germany. We pay 60€ for 12 months (~78 Dollar; US subscribtion seems to cost 60$) and get less features than the US. Needless to say that I didn't renew my XBox live subscribtion again…

intellerv

yes, but minimum pricing for games is still 200% more than competing platforms……THIS has to change.

The Wee Bear

The UK, top pf the rip off list once again, now there's a surprise. NOT! :@

Uncle Sam

Unnecessary taxes? Bummer. Payback is a bitch!! USA!!
xma1e

Common practise to screw the UK and has nothing to do with taxes, etc. It is often cheaper to import the same goods from us AND pay import duty. Most companies are just lazy and keep the same figure without any conversion.

koyce

Maybe it has to do with difference in VAT

GP007

To some extent it probably does I bet, when you have a 20-22% VAT to pay that skews any real price comparisons.
http://tedhoward.com Ted Howard

First logical comment so far on this post. If you want to actually answer the question "Why?" then stop complaining and think about what you would do if you ran Marketplace. First of all, you need to choose a way to set exchange rates. Which Forex market do you choose? How often do you adjust the rates? What are the tax consequences in different locales? Regulatory consequences such as easier/harder for consumers to demand rebates (aka chargebacks)? Support infrastructure for each locale? And so on.
I can't, however, think of a reason for it to be a nearly flat 30% increase across all non-US locations.

http://www.evolvingsoftware.com/ Sebastian Gray

I don't think it is to do with VAT as that is already taken in to consideration here: http://create.msdn.com/en-US/home/faq/windows_pho…

It explains by region, who is responsible for the Tax component of the sales, either the developer or Microsoft.

Australia is the easy example, 10% flat GST for sales; no where near equates to the difference.

Cheers,
Sebastian

xma1e

Nope, as i posted above, it's cheaper to just import goods and pay all the taxes and duty, still making a saving.

What M$ are doing is called SHAFTING ITS MARKET. And they wonder why people pirate.

Milky

Meh, we in the UK are used to being raped by everyone.
Legacy

Does this mean that Microsoft is planning to launch the WP7 marketplace in India & elsewhere?
http://iron7.com Stuart Lodge

Not really a big story:
- some of the difference is down to round numbers
- some of the difference is down to tax
- all of the numbers are public domain
http://www.facebook.com/profile.php?id=100000666438272 Attila Horváth

I'd gladly pay 30% more if I could buy apps in the first place. Microsoft hasn't made the Marketplace available in most European countries, so we have to use fake Windows Live accounts, and it doesn't work with many credit cards.
And I don't really understand why. I know that copyright laws are different in each country, and it's hard to sell music and movies internationally, but applications? They don't fall into the same category, and most digital distributing services for games work all around the globe.
Oh, and Microsoft isn't the only company to declare that $1=€1=GBP1. Steam, for example, is doing the same thing for years now, and that hasn't stopped them from being the biggest online PC game distributor service.
Salil Shukla

Surur, did you check the veracity of Sebastian's claim? Because as far as I know, Windows Phone Marketplace does not even exist in India. Where did he get the price in INR from?
Oh, and by the way, the T-mobile HD7 retails at $539.97 (with tax) in the US and its equivalent would be INR 24,517. But it is being sold at INR 29,900. So? Isn't a mutlinational company free to decide pricing of its products in different countries?

http://www.facebook.com/BrodyM Brody McKee

Sorry buddy, but Microsoft doesn't sell that phone. It runs their software, sure, but they do not set it's price nor do they sell it.
http://www.evolvingsoftware.com Sebastian Gray

The price comes from Microsoft; No idea why if it's not available there now (I could assume so it's covered when it launches in India but that's speculation.)

I've pasted a screen shot for you on my blog here: http://dsebj.blogspot.com/2011/01/windows-phone-7…

& India is also mentioned in the public available pricing section of the FAQ: http://create.msdn.com/en-US/home/faq/windows_pho…

Yes, the information in the article is based on available information from Microsoft.

Cheers,
Sebastian

Bob

This is a ridiculous article. How is Microsoft ripping anybody off unless they're keeping the excess to themselves and not passing on a fair share back to the developer?
sab0tage

A $1.99 app would be around £1.53 in the UK, accounting for VAT; having it rounded down to £1.50 would be nice, or bump up the price of the $ amount instead. It's moot anyway, developers can decided what to charge each region separately can't they?
http://twitter.com/chmun77 @chmun77

I hope the apps will be cheaper as WP7 get more mature down the road… Maybe competitions will make the apps more cheaper, just like iPhone and Android.
Dennis

i would gladly pay overprice here in sweden if microsoft accepts my visa for my UK live account -.-
http://www.facebook.com/profile.php?id=1049037324 Moritz Knop

I think the App Prices are okay but the XBOX Live Prices should be getting cheaper anytime soon, it is so expensive when you pay 2.99 for an average game or 6.49 euro for a good game where are 0.99 cents prices, the very poor intensive game pacman is 4.49 euro… way to expensive
Anonymous

most things in australia are 50-100% more expensive than the us with current exchange rates…marketplace apps are far from the only place where things are more expensive here.

http://www.facebook.com/profile.php?id=100000096491109 Mj Williams

thank you for mentioning this. The AUD is crap almost

oslik

Microsoft writes in the markeplace FAQ that in some countries VAT is included, while in others is not. In EU, VAT is included – but different percentage in different countries. And is only about 20 %, not 30 %. But still, if VAT is included in EU and not in the US, the difference is just cca 10 %, not 30.
danielgr

Now I'm impressed… so it took you guys until now to realize that nothing is priced similarly on different parts of the world…
Have you checked the price of Windows Phones to begin with? cars ? your PS3? i-phone? Macbook? a digital camera? Windows !?!?
Have you checked the price of whatever you may want to buy in a supermarket?

There is nothing wrong with those prices, because there is not pretending to account for any "exchange rate". If you paid for exchange rate it would mean you are living in Europe and paying in USD for example, which you are not. You are in Europe you are paying for the European market place and your purchase and everything follows both your country's legislation and trade rules. You are in another country it's a different story, and you can bet that if the USD gets 50% more expensive in a year prices are not going to go down.

Nobody is applying any exchange rate, simply fixing different prices for different markets, like it has always been.
Antonio

Not shocked. as someone said, there is a bit of VAT implication, a bit of bank charge per transaction, a bit bank charge for exchange rate and a bit of anticipation of any FX variation.

you definitely cannot take the wholesale F, apply it to the USD and say that this should be the price in foreign currency.
it's much more complicated than a simple conversion…
http://twitter.com/jessiethe3rd @jessiethe3rd

This is no big surprise. You can find this anomaly in just about everything from every vendor that is based in the US and does business in another country. The cost to business is most certainly higher.
E. Carter

Surur… don't you think it's a bit irresponsible for you to claim Microsoft of ripping us off without any real data to support that? Seems you are just fanning the flames to get comments on your article. Cheap trick!

Hatorade

Exactly!!!! Surur your articles are either ok or a complete sham with no solid basis, are you aware that various countries have taxes etc in place that are outside the control of Microsoft??? Are you aware that currency rates flactuate golbally on a daily basis???

Do you have proof to back this article?? Infact I dont expect any proof in your articles just some souped up story to get attention, your tactics are getting old and boring, do us a favor and get us some real stories.

bitslave

If you're US based then it's 'no story' if not then it is a BIG story.
http://www.evolvingsoftware.com/ Sebastian Gray

Proof is from Microsoft, all of the information in the article is available from Microsoft. I've pasted a screen shot for you on my blog here: http://dsebj.blogspot.com/2011/01/windows-phone-7….

It's a reality that for exactly the same program from the Windows Phone 7 marketplace, that you will pay more for it, if you are purchasing it from another country – that's how their pricing is structure when you add an app to the marketplace, it just doesn't then display the current exchange rates along side.

Cheers,
Sebastian

http://www.facebook.com/profile.php?id=542557737 Jonathan Marston

It's not nearly as straight-forward as that table makes it out to be.

For example, a $4.99 app costs £3.99, which comes out to about $6.18, which means it's a $1.18 premium; possibly due to tax, possibly Microsoft price-gouging, but only a 23% premium as opposed to the 55% you quote in the article.

Similarly, a $0.99 app costs £0.79, which is $1.23; a 23% premium.

Apparently at the $1.99 pricepoint they are just rounding from £1.57 ($1.99 is £1.28, plus 23%) to £1.99. Probably because above £0.99 their pricing algorithm just rounds up to the nearest .49 or .99.
http://www.facebook.com/slygamer Steve Williams

It's all straight forward in Australia. No tax (GST) on these items, our dollar is currently on parity with the USD, and we get charged a hefty excess. The same excess applies to the annual developer registration fee.

http://www.facebook.com/BrodyM Brody McKee

It's BS Steve. I'm also Australian and want them to explain how this difference came about???

bitslave

Me too.

chris

me too

Wes Halton

No different than Adobe, Photoshop is much much dearer to buy in the UK than the US, even if downloaded from the same server. Maybe its a charge for having to push it further down the cable to reach us over here ?
mhanzle

this site has officially gone down the shitter. trying to be like msmobiles now are we. what a complete joke
honjai

i'll add a wholehearted yes to this. was trying to use my US credit card or another address to save on the difference considering Canada's pretty much at parity with the US dollar.
hAl

The exchange rate of the dollar is changing every day write this article next week or next month an the number will differ again.

Very weird though that you show rates for marketplace that are not available at the moment.
djguapo

pesos, not peso