We get asked to “justify” or “explain” pricing so often, here is a semi-permanent explanation:
For the Steam Digital Deluxe version of the game, the stock price at launch is $49.99 (US Dollars). We convert prices into Euros (EUR) for the Euro-zone and into Pounds (GBP) for the UK. This is how it is worked out…
In the US, the price is EXCLUSIVE of any local taxes, as sales tax varies by State and even by parts of County. In Europe and UK, the price is quoted INCLUSIVE of VAT, which varies by Country, just to confuse us all. For this exercise, lets assume 20% VAT.
So – take the 49.99 USD, add 20% for VAT, giving us 59.99 USD. At current rates, that translates to 41.72 EUR and 36.81 GBP. But the rates are always fluctuating, Euro is higher now than it has been, Pound is lower. That is all known as “currency risk”.
Round the Euro price up a touch and we get to 44.99 EUR; round the UK price down some, we get to 29.99 GBP. Do the math back the other way (divide by 1.2 to take VAT back out and compare to the USD price) and you get nominal exchange rates of 1.33 for the EUR and 1.80 for the GBP. We think this is a reasonable approach. And don’t forget that this way we/Steam pick up the costs of exchanging your money back into USD – which can get quite expensive, too.
Things we have considered doing and no thank you:
- Convert in the Steam store on the fly at the prevailing exchange rates: No. No-one will ever know the price until they get to the check-out and the EUR/GBP price will always be fluctuating. Far too messy.
- Give up and go with the same number in all countries – 49.99 USD, 49.99 EUR, 49.99 GBP: No. Tempting, though. We’d make more money but, boy would people whine at us :) !
- Let people use their credit cards and pay the USD price: No. Apart from not knowing what you are paying, then people are also going to have to pick up the costs of exchanging currencies on their credit cards, which could be hideous.
We’ve been alerted to a few anomalies, that we’ll look at: these include odd areas of Euro-land that are VAT-free, such as the Canary Islands (Spanish territory, but, apparently, no VAT) and presumably Andorra, San Marino and the Vatican City. Those will take a bit more working out and we don’t have an answer to them yet!