educational

Global Perspective on Income Inequality, Porn Pricing

Stephen Yagielowicz

In a recent discussion about the challenges of selling adult fare in a maturing market, one observer commented, “millions of people come online for the first time each day” — a response designed to provide assurance of the continued marketplace for digital erotica.

While accurate and current figures on the daily number of new Internet users around the world are hard to come by, one thing is clear: although growth is significant, it centers around BRIC-I and the developing world — and is likely occurring via a feature phone or Internet café.

While no business can run at a loss and remain in business, there is significant margin in many digital media products, allowing drastic price drops for price-sensitive markets.

In America and Europe, the vast majority already enjoys Internet access, and form the traditional audience for adult entertainment offers. For Brazil, Russia, India, China and Indonesia (BRIC-I), their strengthening economies are leading more people to go online, providing new opportunities for online marketers who are able to reach this audience.

While Indonesia (the world’s largest Islamic state) objects to pornography based upon religious grounds and China (the world’s largest Communist state) prohibits porn due to “moral” objections — restricting access to billions of potential consumers — it is clear the freedom of thought and expression enabled by the Internet will one day normalize the culture of these countries, providing new revenue streams for careful carnal capitalists.

In the meantime, however, the developing world can be reached with the right offer — but it is having the right price that will make a difference.

For those who think “the price is the price” and leave no room for bargains, realize that the $29.95/month you might get from an American for a porn site subscription could be a month’s pay in another part of the world, and this will definitely hamper sales.

While no business can run at a loss and remain in business, there is significant margin in many digital media products, allowing drastic price drops for price-sensitive markets — if you can sell porn for a penny (or a buck or two) and still profit, the world is yours…

But how can profitable price points be determined? For one thing, understanding the economic theory of purchasing power parity (PPP) is required.

According to Wikipedia, PPP is a technique for determining the relative value of currencies by estimating the amount of adjustment needed to the exchange rate between countries in order for that exchange to be equivalent to (or on par with) each currency’s purchasing power.

One effective tool for determining relative price points is the so-called Big Mac Index that compares the price of McDonald’s popular sandwich in countries around the world, serving as a great guideline for setting your own “bottom dollar” price points.

While the average world income per capita is reportedly around the $8,000 mark, this number is skewed by income inequality; with the vast majority of people earning $2,000 or less per year, compared to the average $50,000-plus earned by Americans. For perspective India’s per capita income is just over $1200, with a PPP of $3,600 — making equivalent pricing of a $29.95/month U.S. membership worth just over $2/mo. to the Indian market.

Work your offers around this type of price point geo-targeted to selected regions and you will solve a major factor in lagging sales, even if finding profitability is challenging.

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