The dollar is in the news these days with its value dropping fast, especially against European currencies. The greenback has lost 10 percent of its value against the euro this year.
As a cat who lives outside of the US but does business in dollars, this news translates directly to a 10 percent pay cut for me. As I wrote in Anatomy of a Price Change a few weeks ago, the steady decline of the dollar was one of several factors involved in my decision to bump the price of Big Medium 2.
I'm not the only independent developer trying to sort out what this means for my product pricing. Rory Prior is an independent developer of Mac software based in Wales, where a dollar buys you just 50 pence these days. He's considering a change, too -- either a price hike, or switching to sales in euros:
We've almost reached the point where 1 dollar is barely worth £0.51 and I've decided that if it drops below £0.50 I'm going to have to switch over to selling in euros. It's either that or hike all my prices up to try and maintain the same level of income, something I'm not that wild on doing even if switching to euros essentially has the same effect.
The comments on his blog indicate that his American customers would prefer to see a price hike in dollars than a switch to a different currency. I reached the same conclusion and decided to stick with the dollar. My sense is that my customers (majority American) will always be more comfortable purchasing a product in their own currency. But that decision also contributed to a 40 percent hike in Big Medium's dollar price.
I'm not very clever about international currency markets or monetary policies, but I do know this: Even though Rory and I are just one-man shows, we're living, breathing demonstrations that the declining dollar means reduced purchasing power for Americans, including folks like me who live abroad.
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