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Localized pricing opens up a big opportunity for your business to expand its customer base. If price localization isn’t a part of your SaaS strategy, it’s limiting your company’s long-term growth and preventing your business from reaching customers around the world.
By including price localization on your website, you give your customers the experience they are looking for when considering your product. Here’s a closer look at what exactly price localization is, and how it benefits your ecommerce site.
A Tailored Experience
Price localization is essentially tailoring your company’s pricing strategy to each buyer, depending on their local factors. In this sense, “local” can refer to a number of things.
It includes demographics like geography, time zone, and currency, but it can also encompass other buyer characteristics like profession, price sensitivity, buying history, browsing history, and loyalty.
Localized pricing takes these factors into account as you present all information to potential customers – not just prices, but product pages, cart contents, payment options, and even little details like timestamps. Every customer has a customized experience.
Why is price localization so important? Mainly, because there is so much competition in the global landscape, you don’t want your checkout experience to exclude a potential buyer because of their currency preference.
In a broad sense, price localization is good customer service. It shows customers that your business is equipped to scale globally and willing to adapt its processes to a global audience.
Litmus, the email productivity company, found that expanding their euro-based pricing options multiplied their conversion rate by a factor of 5. Simply offering their services in dollars to people from dollar-utilizing countries, without requiring a clunky conversion, made all the difference.
In a time when the customer experience is of the utmost importance, localization is a great way to tailor your site so that it serves customers all around the world.
Less Cart Abandonment
A better conversion rate means lower cart abandonment, and that’s one of the driving forces behind price localization. When the options make sense, the checkout process moves along smoothly.
Potential buyers abandon online shopping carts quickly if the process seems overly complicated or not applicable to them. In fact, almost 70% of ecommerce transactions are abandoned before completion. As cart abandonment continues to grow, be sure that your business is taking every step to ensure that you avoid cart abandonment.
Exchange Rate Management
Managing exchange rates shouldn’t be a constant headache for SaaS sellers. If you use a robust ecommerce platform, exchange rate management is an integrated part of the process. Buyers can come from anywhere in the world and are instantly able to see their localized currency without any extra steps needed.
Customers can even move from one part of the world to another, and your service flawlessly follows them. So you’ll never lose someone who relocates from Europe to China, simply because your ecommerce site can’t handle their new preferred currency. And their pricing can stay consistent based on their order history, even if the usual price for that country is different.
Better Pricing Strategy
Localized pricing isn’t just about writing the code to convert € to ¥ automatically. It’s also about making strategic pricing and product decisions.
Every country around the world has a certain amount of purchasing power and price sensitivity based on its economic situation. This is famously tracked by the Big Mac Index, where the price of a McDonald’s burger is used to measure every country’s purchasing power.
For your SaaS business, this can mean that your service seems more or less attractive in certain countries. You might need to offer a significantly different price for customers in Brazil than those in Costa Rica, based on their willingness to pay.
It’s really a form of testing that takes place on your real-world customers. Track your order history based on country of origin, and use this information to inform future pricing decisions.
Customer Lifetime Tracking
Speaking of tracking, price localization can help you track buyer behavior, build a more vibrant picture of your customers, and determine their lifetime value to your company. That’s good for your profitability and long-term strategy.
Imagine discovering which three countries in the world are your best prospects for fast growth – faraway countries you would never have expected. Now you can funnel advertising efforts to those countries and know your money is well spent.
Think your business is ready to explore price localization? Start by taking a look at what the FastSpring platform can offer your business. Click here to request your free FastSpring demo today!