Suggestions for dealing with a monthly Subscription billed in $US but showing up in foreign currency as varying monthly amount


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We just started a Monthly Subscription this year. We're now expanding it to non-US currencies (e.g., $AUD).

The challenge is that the amount the customer sees (in $AUD) will vary every month with the exchange rate. So on a $50/m $US subscription, an Australian might be billed $55.32 AUD, then $53.12 AUD, etc. That could really confuse a subscriber and cause them to question the charges.

I have one idea, but looking for other suggestions and feedback:

Charge less than $50 US so that they are always paying less than the list price.( So if it's $50 US/ $56 AU today we charge $45 US so they almost always pay less than the list price of $56 AU)

Have a note in the receipt that says:

Your Monthly Charge will vary slightly due to [Standard/public*] Exchange Rates.

The monthly charge appearing on your credit card statement will vary due to changing exchange rates but will usually be less than the list price.

We bill in $US but that charge is converted to your local currency and that exchange rate varies by month. We have discounted your price by $5 (US) so that, while your payment amount will vary with currency fluctuations, it means you'll normally pay less than the list price."
(I'd word it more concisely).

*I need a better word here. Something that conveys that we're not just pulling the exchange rate out of thin air, and that it's the standard amount.

Credit Cards International Billing

asked Jun 22 '12 at 15:12
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Clay Nichols
737 points
  • Is your price stated in US$? If so - why worry? If not - you must bill based on your listed price, if you list in different currencies - bill in different currencies. – Littleadv 9 years ago

3 Answers


1

Just put a note "All prices are in USD".

I am sure I speak on behalf of other Aussies when I say "we understand exchange rates, it's ok".

Down the track you can set up your system to have different prices for different currencies and actually accept payment in those currencies, but it's tricky and expensive so don't worry for now.

You aren't inventing the wheel here, don't make it a bigger deal than it needs to be.

answered Jun 22 '12 at 17:43
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Joel Friedlaender
5,007 points

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Its not clear if your prices are listed in AUD or USD?

Charge less than $50 US so that they are always paying less than the
list price.( So if it's $50 US/ $56 AU today we charge $45 US so they
almost always pay less than the list price of $56 AU)

I think thats a short term bodge :-

  • Its still confusing - price will jump up and down and is confusing if you don't expect it even if it is less than what you first saw. And 12 months in can I even remember the price I first saw or have I just wondered why it went from AUD 50.01 to AUD 54.87 for no reason I can see?
  • You're going to have to stay on top of currency movements in every market every month. Maybe $5 will work now but what 6 months time - maybe its then dramatically over or under the quoted price. Right now I wouldn't like to predict what USD/EUR rate is in 6 months!

Two alternative options

  • Bill in local currency (sure you've thought of this and it often has extra payment processor complications it moves the x-rate thing from their problem to yours. If you're operating on thin margins then you can look at hedging this risk though this isn't the panacea that some think it is).
  • Price and Bill in USD only - the common wisdom is that most people of the developed world are used to working with foreign currencies, and Non-US people are much happier dealing with USD than US customers are dealing with non-USD.
answered Jun 22 '12 at 17:08
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Ryan
1,365 points

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Fix prices for all currencies. This way you are the one taking all the risk related to currency fluctuations. You don't want your customers to worry about currency swings, so offer them a fixed price in domestic currency (your product might be very sensible to prices, what means that small change in price could mean significant decrease of sales volume)

You can never really know for sure what will happen on currency markets, so approach with prices in local currency can have both, positive or negative effect on your USD income. However if you evaluate, that with this approach, you are too heavily exposed to FX risk, you should condsider implementing some additional mitigation instruments. More about these you can find out by searching for "FX risk exposure", "hedging", "FX risk mitigation strategies"...

answered Jun 22 '12 at 20:57
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Matej Zlodej
273 points

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Credit Cards International Billing