Different story in places like Africa, where you often make a completely different app to contend with things like data caps and slow networks (e.g. Facebook Lite).
That's not true, where are you imagining this from? Hardware certainly doesn't cost the same, at the very least there are different VAT levels, but also pricing is adapted to the local market (literally just checked, i can get an Asus ROG Zephyrus G14 for 300€ less in Bulgaria compared to France). Software I'm unsure how to check, but Netflix costs varies by county.
This is insane. What prevents grey market arbitrage? Why wouldn't hardware from the country where hardware is cheapest immediately get posted on the local equivalent of eBay in the country where it is most expensive?
In any case I had no idea hardware margins were so squishy. For software, yes, profits are maximized by reducing unit prices where incomes are lower (since otherwise you won't sell any), but that's enabled by the fact that the marginal cost of unit production is very nearly zero and you're still making money even if you sell it for 25% of the rich-country price. That's obviously not the case for a laptop
Few things - mostly support and localisation support (e.g. the keyboard layout is different in iirc literally every European country, and most people want their local layout they know).
>Software I'm unsure how to check, but Netflix costs varies by county.
If it does (I don't think so, the minimal differences are because of VAT) you can subscribe from another European country (using a VPN or whatever) and Netflix can't ban you or block you from using it (like they would if you bought the subscription from a third world country for example)
Is it fair that both Finland and Italy pay 7.99€/month for the basic plan?
(This is why I said "in practical terms")
And thanks to another EU law if you subscribe to Netflix in one EU country, you get that country's Netflix Library everywhere in EU. So we can talk about "Swedish Netflix" and "Bulgarian Netflix" as two different services..
And there is no such thing as consistent, EU-enforced pricing. Get out of here ...
It sounds like the main North American market is subsidizing the apps being produced and sold worldwide.
Does the same logic apply for other virtual good such as digital music elsewhere?
There's a theory of surplus in economics, which is the extra benefit that someone gets from a transaction above what they would have been willing to pay.
If I buy a game that I would have paid $100 for for $50, then I have a "$50" consumer surplus. One the other end, if the producer was willing to let that game sell as low as $40, then they have a producer surplus.
Profit seeking producers want to capture as much as the surplus as they can, and they do this through price discrimination. You see this in product as two things that are essentially the same but with different marketing etc.,
Price discrimination based on geography is quite effective though as well. People with lower incomes aren't as willing to pay high prices for games. Countries can be effectively segmented based on geography (whether virtually or not), and through this producers can charge a higher price to countries with high incomes (taking away the consumer surplus they would have had vs a lower global optimal price), and still get some value out of consumers in lower income countries.
So it's not that NA is subsidizing the market, so much as it is the company trying to squeeze the most of everyone. Now, you could call it subsidizing in that there are probably products that wouldn't be brought to market without the NA market to pay for them, but that's not really "subsidizing".
It's a bit deeper than that, let me share my perspective of purchasing software in a developing country.
Growing up I remember that video games only picked up in popularity when you could "buy" pirated games. For reference, I'm talking about the Nintendo Wii era and those were about 1-3 USD each for a CD with the pirated version of the game. Also for reference, right now a Nintendo Switch game (that costs $60 MSRP in the US) sells for about $90 due to taxes and stuff [1].
To me, there's two significant issues with that: 1. People don't feel like they are stealing when buying pirated goods. They are spending their hard-earned cash into something they want/like, and that's as far as their reasoning goes. This happens for other software like Photoshop too, and even physical goods. I remember buying fake yu-gi-oh cards knowing they were fake, but that's the only ones that were available and that I could afford. I had a few legit ones and I treated them as a treasure, in the same way you treat your fancier clothes better than your normal ones. 2. You can have a full meal in a diner for about $3 in my country, desert and all. If you want to sell food, that's how low you have to go because that's what people can afford. A $10 dollar meal is normal in the US, but here it would be a luxury.
Now, that combination is very problematic as you can expect. People do want to pay for stuff, and to their minds that's what they are doing. To me, selling pirated goods is as scummy as it gets, but I cannot blame someone for buying it when it's their only choice.
So for most companies, having "regional" prices on this markets is the difference between selling or not.
[1] Not exagerating at all, google `700 GTQ to USD` and then this https://www.max.com.gt/juego-nintendo-switch-pokemon-violet-...
Yes. That's because they aren't stealing. It's completely normal to feel like you're not stealing when you're not stealing.
The copyright monopolists would very much prefer that you felt bad when you "steal" their imaginary property but the truth is nobody other than the politicians they lobby cares about their opinion on anything.
Any attempt at price discrimination should immediately result in arbitrage.
That's every product ever made for profit by a developer in a 1st world country. It's still essentially subsidizing even if you don't like the optics of the word.
It would be subsidizing if the effect were that Americans pay more so that people in other countries pay less.
But the alternative to Americans paying more isn't the other people having to pay more, the alternative is the product not existing. (or, alternatively, the company making less profit).
There might be some cases where if the US market didn't exist, the price in another country would go up, but it would happen because a company wasn't able to sustain a lower price with the reduced quantity, and would therefore have to settle for selling less quantity at a higher price.
I think you'll find that this has been the practice for many decades. A stark example is medicine pricing.
On the same note, why are Levi’s jeans $100 bucks in Europe, but $40 in the USA? They’re probably coming out of the same Asian factory. Not an economist but different value propositions I guess.
I’m sure sales tax is less in pretty much every US state compared to European countries, but it still doesn’t explain a $60 difference in price. It’s largely different price points based on different locales in accordance with what consumers are willing to shell out for the product.
Check out this brief description of how software proliferated in Poland during the early years of computers (3:09-8:27): https://youtu.be/ffngZOB1U2A
Yep. Even ad supported apps are subsidized by NA users.
