Update July 14, 2011: Two months later, Apple has adjusted the international App Store prices to account for exchange rate fluctuations. See my follow-up post.
If you were born after 1971, you have never lived in a world where the exchange rates of the major international currencies are fixed – that is, unless you have a paid app on the iOS or Mac App Store.
Today, exchange rates float more or less freely due to supply and demand, leading to sometimes large changes in value. For example, the value of the US dollar in Japanese yen has fluctuated between by as much as 50% just in the last five years:
Source: Yahoo! Finance
Not so in Apple’s World of App Store Economics: just before the iPhone App Store went live in 2008, Apple fixed the price points an app can have for all international currencies, and they haven’t changed them since. For example: if you set your app’s price to $4.99, Apple will sell the app for £2.99 (£2.60 excl. 15% VAT1) in the UK and ¥600 in Japan because these price points were roughly equal in value in 2008. In May 2011, they aren’t anymore.
Correspondingly, Apple will pay developers their 70% share of the local prices when an app is purchased: $3.50 in the US, £1.82 in the UK, and ¥420 in Japan. Now convert these into US dollars: for each app sold in the US, you get $3.50 (easy). A British customer, on the other hand, brings you only approximately $3.00, and a Japanese customer a whopping $5.23 (in May 2011). One app sold in Japan nets you 75% more than the same app sold in the UK!
At the time I am writing this, the difference between the British pound and the Japanese yen is the most striking, while the two major currencies for most developers, the US dollar and the euro, are almost at the same level as they were when Apple fixed the exchange rates in 2008. That’s only true for this specific point in time, however. 12 months ago, euro revenues measured in US dollars were weaker than pound sterling revenues are today.
The table below illustrates this for all currencies Apple uses in its App Stores across the world (App Stores in countries not listed here use the US dollar as their currency). As above, we use an app price of $4.99 as an example.
| App Store | U.S. and Rest of World | Mexico | Canada | UK | Euro countries | Norway | Sweden | Denmark | Switzerland | Australia | New Zealand | Japan |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Customer Price | $4.99 | MX$50.00 | CA$4.99 | £2.99 | 3.99 € | 29.00Kr | 38.00Kr | 30.00Kr | 5.50Fr | AU$5.99 | NZ$6.49 | ¥600 |
| Developer Proceeds | $3.50 | CA$3.50 | £1.82 | 2.43 € | AU$3.81 | ¥420 | ||||||
| Proceeds in US$* | $3.50 | $3.63 | $2.99 | $3.52 | $4.07 | $5.23 | ||||||
| Proceeds in euro** | 2.41 € | 2.50 € | 2.06 € | 2.43 € | 2.81 € | 3.61 € | ||||||
Again, note that this is a snapshot of the exchange rates in May 2011. The results can be totally different if you do the analysis for other dates.
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End customer prices in the EU are always quoted incl. VAT. Although the VAT rate in the UK is 20%, the relevant rate is that of Luxembourg (15%) because that’s where iTunes Europe is based. ↩︎