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What To Do About Currencies?
Posted 27 October 2008 - 05:55 PM
I know I don't post very often, but this is the place I come to when I need good experienced advice and I'm interested to hear what others think of my question. By the way, I hope this is the correct forum, sorry if it's not.
I'll try and keep the stoy short. Anyway, At the beginning of the year my son came to me and said "Dad, why don't we make XYZ as I need one and I reckon lots of other blokes would like one as well". So I built him an XYZ. He put a picture of it up on an XYZ related forum and people started emailing us so they could get their own XYZ also.
Anyway, we have now sent our XYZ's to every state in Australia as well as the US and the UK and had enquiries from other countries as well as enquiries from stores wanting to stock our XYZ's.
Now to the question. When we started the $AU dollar was WAY up and was just about equivalent to the $US. But now the $AU dollar is WAY down. I accept payment from people via Paypal. Up to this time I've charged Aussies in $AU but everyone from outside Australia pays in $US.
Now things have settled down a bit, I'm wondering if I should just charge all customers in $AU as this is pretty easy using Paypal and I don't have to worry about conversion rates etc.
So I'm wondering, if I charge in $AU dollars I MAY get more orders because at the moment the $AU is worth about half a $US and about a third the GB pound so the price of my product would look EXTREMELY appealing to non Australian customers. BUT, when I get an order paid in $US dollars we make extra $$$$'s because of the conversion from $US to $AU dollars.
I now want the business to grow as the outlook looks very healthy. There are others making XYZ's and they charge more than I do for a product that is of the same if not lesser quality.
So the question is, should I charge Australians in $AU and others in $US dollars or everyone in $AU dollars and hope to attract more customers???
Thanks for reading this and I look forward to reading your replies.
P.S. By the way I'm based in Australia, source my materials in Australia etc.
Posted 27 October 2008 - 06:17 PM
IMO it comes down to how much work you want to do in trying to make money off of the conversion float. Which of course is something that changes daily at least, hourly lots.
If all of your costs are Australian, you could certainly go with all Australian pricing. That's probably the easiest and at least you'll make a consistent amount of profit, assuming you've got your profit margins already set. That's probably the easiest way to do it on your end. Understanding however that most people won't have a clue what the actual conversion rate is unless and until you tell them.
That's what I do because I don't have the time and don't want to expend the effort to play the currency conversion float. Does this mean people ordering from the UK and paying in GBP get a significant discount? Yes it does. But at the end of the day I don't pay for anything in GBP. I pay in USD. So I'm fine with it.
On the other hand is doing a conversion for them into their currency, but charging what is the actual currency conversion rate. This is going to end up being the same thing, where people from some countries are going to get a discount.
On the third hand, you could continue to do what you're doing where you're making a bit extra on the float because you're going through a few extra steps.
I honestly don't think there's a right answer or a one-size-fits-all answer. It really depends upon how much extra work you want to take on with maintaining your pricing structure and doing the conversion yourself. Personally I'm either lazy or just have my eye on a different profit center, because I don't mess with the float at all even though most of my sites sell stuff all over the world.
Posted 27 October 2008 - 11:34 PM
Thanks for the reply and the move.
The dual currencies doesn't create any more work for me. All I say is, if you're from Australia it costs you this much in $AU, if you're from anywhere else, it will cost you this much in $US. So I get paid in $US and when I withdraw from Paypal, paypal does it's conversion into $AU for me.
I'm starting to think that I may change to just charging in $AU, that will make my XYZ's extremely cheap to people from the US and the UK compared to my competitors price. I also think that trying to make money should be approached like SEO, slow and steady (and honest) wins the race.
Posted 28 October 2008 - 04:02 AM
Posted 28 October 2008 - 05:57 AM
Or there are currency converters available out there on the web you can point people to. Use a new browser window if you link to those from your store. Or there are even a couple that offer API's so that you can feed it the price and have it crank out a current conversion rate for you right on your page.
Posted 28 October 2008 - 05:22 PM
Thanks for the replies. I think the big currency conversion site provides code for you to put on your web page so people can convert from one to another without leaving your site and that's what I'm thinking of using.
Thanks for your help people.
Posted 29 October 2008 - 10:58 AM
The currency calculator is a good idea, but I don't want visitors leaving my order form so I'd rather they start the checkout process. This also gives me the opportunity to capture their information in case they drop out due to the conversion. If I can get them through PayPal I can also keep the native currency until I get a favorable exchange, but that doesn't always work.
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