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The Windows Phone 7 Marketplace’s 50% Hidden Tax

imageSebastian Grey, the developer of Fierce Game Hunting for Windows Phones, provided the following  which is staggering:

FACT: Applications on the Windows Phone 7 Marketplace will cost you more, if you don’t live in the USA.

When uploading an application to the Windows Phone 7 Marketplace, a fixed exchange rate is used, across a number of geographies and depending on what price point you select there is a relative difference to the final amount that is actually charged to the end consumer. As an example, we will use the pricing for Fierce Game Hunting, which I priced at the 1.99 USD price point. At this price point the foreign currency equivalents are calculated and displayed. In Australia, a game price 1.99 USD is priced at 3.00 AUD – which is well above (50% above) the current exchange rate; I always assumed that this was a local and isolated issue for the Australian currency and it’s value in Microsoft’s systems but apparently not.

Below are the details, all of these exchange rates have been taken from Bing.Com using the 1.99 USD in AUD format query.

The current conversion rate is shown and the amount in brackets is what you will actually be charged if you are a consumer from that region, based on the WP7 Marketplace pricing setup:

1.99 US Dollar = 2.003725 Australian Dollar (AUD 3.00 price on the WP7 Marketplace)

1.99 US Dollar = 1.532302 Euro (EUR 1.99 price on the WP7 Marketplace for Austria, Belgium, France, Germany, Ireland, Italy, Spain)

1.99 US Dollar = 1.982446 Canadian Dollar (CAD 2.49 price on the WP7 Marketplace)

1.99 US Dollar = 15.468326 Hong Kong Dollar (HKD 20.00 price on the WP7 Marketplace)

1.99 US Dollar = 90.290381 Indian Rupee (INR 110.00 price on the WP7 Marketplace)

1.99 US Dollar = 24.330604 Mexican Peso (MXN 30.00 price on the WP7 Marketplace)

1.99 US Dollar = 2.627202 New Zealand Dollar (NZD 3.49 price on the WP7 Marketplace)

1.99 US Dollar = 2.578656 Singapore Dollar (SGD 3.49 price on the WP7 Marketplace)

1.99 US Dollar = 1.916372 Swiss Franc (CHF 2.50 price on the WP7 Marketplace)

1.99 US Dollar = 1.287725 Pound Sterling (GBP 1.99 price on the WP7 Marketplace)

As you can see from this list, you are charged more for living outside of the USA and it’s not just in one region, it’s across the board. Perhaps the Australian difference is one of the larger differences but it is different for all currencies and in all instances it is setup so the price charged on the WP7 Marketplace is more than the equivalent exchange rate.

I realize that there must be a hedged exchange rate being used behind the scenes and I’m yet to see any information if that hedge rate would ever be allowed to go in the opposite direction e.g. a comparative price in a region outside of the USA being charged less.

However, there is one other point of consideration, who actually benefits from this?

Will the developers, who’s applications are being charged out at these inflated prices actually benefit from the difference in the exchange rate or will Microsoft pocket the difference and only pay against the hedged rates they use internally? We will only really know once the marketplace payments start.



Sebastian, thank you for the information. Very informative and it leads to a lot of questions. I presume this makes apps less attractive in some cases as they appear overpriced.  Lets see if the Twitter community can get an answer from MS and figure out where the exchange spread is going.