Ask Slashdot: Should Commercial Software Prices Be Pegged To a Country's GDP?

Here's a bright idea from dryriver Why don't software makers look at the average income level in a given country -- per capita GDP for example -- and adjust their software prices in these countries accordingly? Most software makers in the U.S. and EU currently insist on charging the full U.S. or EU price in much poorer countries. "Rampant piracy" and "low sales" is often the result in these countries. Why not change this by charging lower software prices in less wealthy countries?
This presupposes the continuing existence of closed-source software businesses -- but is there a way to make that pricing more fair? Leave your best suggestions in the comments. should commercial software prices be pegged to a country's GDP?

Comments

Subject

[Anonymous Coward]

Because of the simple fact that doing this will move the problem. Instead of having piracy in those "poor" countries, you will now have resellers taking advantage of the low price and making a profit in the "rich" country.

Re:Subject

[Anonymous Coward]

Dear Dryriver,

You present a most sensible idea and I'm sure there are other alternatives along the same basic idea -- which any human with a heart could devise if she/he gives the problem minimal consideration.

I commend you for seeing the problem from the right angle; notice, though, that many will think about the problem from the wrong P.O.V. -- e.g. like the AC above. And that's why nobody did ever come up with an idea to solve the piracy conundrum and still make possible for the poor guys to be honest.: because they don't care about that... they care about making money. Full stop.

And woe into you if you ever might suggest this is not enough! They'll say you are:

a. a communist;
b. an anarchist;
c. some variant of f4aggot;
d. Mother Theresa;
e. any other offense they can come up with now that they got the power.

But your idea is feasible, just like there are DVD regions and DRM restrictions (e.g. "sorry, Hooloo is not available in your country, thank you for your interest... don't call us, we'll call you"). Some even have done something in that direction... e.g. Windows 7 "Starter" version.

But the best way is really what someone already has posted: Linux.

Re: Subject

[Sid314]

That concern can be addressed by a simple term in the license about country of primary use or country where user lives etc. And if you're going to not follow the license agreement anyway, the price isn't going to stop you from going unlicensed

Re:Subject

[arth1]

You touch upon the problem why it won't work. It requires rigid regional DRM. And that's not a good long term solution.
There's no doubt in my mind that piracy has increased due to regional DRM, both for DVDs and entertainment software. If you can't get what you want legally while others can, that leads to uprising and war. Even if the war is just one person downloading pirated stuff.

Re:Subject

[Austerity Empowers]

Even beyond rigid DRM, there are two other reasons:

1) you create a situation where high GDP countries have much higher costs to operate (piracy in these places is harder and more likely to result in arrest), and as a result businesses sometimes become impossible to start due to investment factor. It makes us less able to adapt and try new things. This further sets the stage to enable us to continue to exploit labor price differences and exploit workers on both sides of the political border.

2) The vendor needs to recoup his costs (even if we ignore profit, which their investors never do), and we assume the price given to you is at least somewhat based upon development costs, then the low GDP countries aren't paying their way. They're relying on high GDP countries to fund this software so that low GDP countries can leech. I'm not sure anyone wants that particular kind of charity, we prefer it to be out in the open (and tax deductible)

DRM is just the mechanism hollywood came up to enable them to do exactly this.

Re:Subject

[wvmarle]

Yay! More of our beloved DRM!

Re:Subject

[ShanghaiBill]

It is a dumb idea. Just because someone lives in a poor country doesn't mean they are poor. Just because someone lives in a rich country doesn't mean they are rich. It would be more reasonable to consider the income of each person individually, and instead of doing it for a superfluous item like software, it is much more important to do it for critical items like food. I hereby propose that everyone should be required to bring a notarized copy of their tax returns to the grocery store, so Safeway knows how much to charge for the milk.

Re:Subject

[fph il quozientatore]

So, apart from a meaningless renormalization that is only a display issue, everyone makes the same amount of money. Because they can buy the same amount of things, right? Congratulations, you have just invented communism.

Re:Subject

[Kiuas]

Overseas pharmacies ignore IP protected drugs by using a loop hole in the international trade pacts that allow country claiming a national medical emergency and then go on to create their own generic copies.

You mean overseas countries like the Netherlands, Canada and UK not to mention all the other European countries are 'ignoring trade pacts' with the US? Huh?

Yes, unlicensed manufacturing is going on in places like India, but the fact of the matter is that the drug companies are charging insane amounts of extra in the US because they can. After all, they seek to make profit, so to them, the price is set carefully to the point that allows them to extract the most profit out of any given economy. The pharmaceutical industry is in a position in which people often have to buy their products or they will die. This is what allows them to ask prices that are way beyond what their actual R & D costs are. Look at the chart from this article outlining the costs and profits of the largest drug manufacturers. All of them spend more money on marketing than R & D and all if them have large margins, with Pfizer making as much as 43 % proft. These numbers are unheard of in any other industry, and they're solely the result of the american medical system's private nature which robs hospitals and states of effective ways to buy drugs cheaper. Instead of the Federal government or a state buying drugs in bulk, each private hospital chain has to buy them separately. This, combined with the fact that insured individuals don't really care how much the price is as long as it's covered by their insurance is what's put the US so far behind other developed nations in drig-polices and allowed the pharmaceutical industry to become the most profitable industry in the US.

There's no way for example European economies to 'force' these companies to sell to us at a loss. The prices they get selling their drugs to us are still profitable to them, butt because most non-US economies use differing forms of collective bargaining among other sensible policies, we're able to negotiate the prices down. A lot. The common counter-argument to this is that if the US started limiting drug companies' abilities to make as much profit as they currently do, they'd stop R & D and we'd run out of new drugs, but this is false. All of the companies can afford to sell the drugs much cheaper than they currently are being sold in the US and still make solid profit.

Re:Subject

[I75BJC]

Regrettably, in the case of the Epi-Pen refutes every thing that you have written and implied. During the Obama Regime, his cronies at the head of the Epi-Pen's manufacturer played the USA Federal Governments health regulatory, care, and insurance systems to the detriment of those allergy sufferers who needed to carry an Epi-Pen (for life-threatening situations that do occur regularly). As reported by the Main Stream Media, this went on for years and only as Obama was approaching the end of his reign, did the situation begin to change. For example, while the Epi-Pen is a name brand drug, the manufacturer listed the drug as a "generic" so that the Government would pay more for the drug – 2 different Government agencies failed to co-ordinate and permitted the Epi-Pen travesty occur. Also, the Government's non-competitive regulations (patents, etc.) did not permit another manufacturers to produce truly "generic" alternatives. In the last days of the Obama regime, an alternative has been announced but for years the cronies ran wild and the people a high price for a simple drug.

Multinationals..

[Anonymous Coward]

Why yes.... my multinational corporation will be happy to purchase 300000 user licenses from our 1 person office in your favorite poor country.

Already like that

[rmdingler]

The reason folks from the US shop in Mexico for prescription drugs and animal vaccines is because this phenomenon already exists.

Re:Already like that

[mattwarden]

This is a different issue. That price change is due to the GBPUSD exchange rate.

Grey market.

[HornWumpus]

Back in the day, I could get grey market Novell packages for less than the local Netmare distributor's wholesale price.

The world is a global market. You can get a genuine Chinese Fluke DMM for the price of a cheapy. They are blowing their peckers off to serve a market that mostly ignores brands in any case.

Microsoft does

[Anonymous Coward]

Windows pricing is very different in China, for example (rampant piracy).

Because people can travel?

[CastrTroy]

What's to stop people from going to Venezuela and buying 10 copies of Final Cut Pro and bringing it back to the US? Unless you are suggesting that they start region locking software, controlling which country you can use software in depending on where you bought it.

Re:Because people can travel?

[omnichad]

What's to stop people from going to Venezuela and buying 10 copies of Final Cut Pro and bringing it back to the US?

The fact that it's only sold in the App store now?

Beside that point, too much of this reselling will eventually raise the GDP of that country - solving the problem.

Pricing of goods

[Anonymous Coward]

What is wrong with you? Those who produce can ask what they like for what they produce. If it isn't worth it people won't buy. Whether it is worth it or not, there will always be those that will steal what is produced. 'Fair' is where you go to sell your pig, not the means by which you set the price.

They optimize it clearly

[140Mandak262Jamuna]

If you allow lower prices for India and China, what's to stop companies from buying the software in those countries and use it in USA? These companies use all the tax loopholes to move their profits to overseas subsidiaries. They know their customers will create subsidiaries in India and turn around and buy services from the subsidiary and use it in USA. The snakes know the legs of snakes, as the old Tamil proverb goes.

Re:They optimize it clearly

[Anonymous Coward]

If you allow lower prices for India and China, what's to stop companies from buying the software in those countries and use it in USA?

Because it would be illegal, duh!
Problems solved, once and for all.

captcha: harping

Ummm, No

[JWW]

They should always use Open Source and just follow the GPL.... ;-)

You can't have it both ways

[El Cubano]

Why don't software makers look at the average income level in a given country -- per capita GDP for example -- and adjust their software prices in these countries accordingly? Most software makers in the U.S. and EU currently insist on charging the full U.S. or EU price in much poorer countries. "Rampant piracy" and "low sales" is often the result in these countries. Why not change this by charging lower software prices in less wealthy countries?

Because if you want to make cheap goods and flood my market indiscriminately and then call me a protectionist and accuse me of impeding free trade for creating a level playing field, then I should be allowed to freely (as in, I am free to do as I please) sell my software at whatever price I like in your country. That is, if I can't have a level playing field, then neither should you. After all, it's only fair.

A problem without a good solution.

[Zitchas]

There isn't really a good solution to this.

If everyone has the same price, then people in poor countries are likely to pirate.

If prices are adjusted so that it is expensive in rich countries and cheap in poor countries, then everyone is going to buy copies in the poor country, one way or another (either via resellers, establishing subsidiaries there, etc)

And if one region locks the software, then that makes people unhappy because they bought the product and want to be able to use it world wide. And it is hard to geolock computers, anyway.

I think just one price and have it constant everywhere is the best option. At least then you don't end up with situations like having everything super expensive in Australia just because.

If they dropped the prices in one poor country, everyone else will complain about "if you can afford to sell if for X in country Y, you must be ripping us off selling it for Z here."

Probably the best strategy is just to have one constant price, let the people in the poor countries pirate, and establish some kind of "pirate redemption" system targeting those areas to get people to spend some small amount to "upgrade" to a legit version. Then set that amount to the reduced amount one would have charged in the poor country in the first place.

Re:A problem without a good solution.

[tepples]

Unless you're Red Hat and can sell support contracts, or unless you're Google and you can use it to prop up your ad platform and app store, where's the money in developing free software? Case in point: What's the "free and open source" counterpart to, say, Animal Crossing or Smash Bros.?

Re:A problem without a good solution.

[Oligonicella]

So basically, fuck small, competent developers who provide products that don't require much if any support services?

Why stop there?

[50000BTU_barbecue]

How about pegging it to my salary? When I'm unemployed I'll buy the biggest IC design CAD package I can!

Re: Gouge the middle class to make them poor

[__aaclcg7560]

Same for prescription drugs - in those cases, the gov'ts negotiate the rates or threaten to make generic or just allow rampant piracy.

For what my late father paid for a one-month supply of his maintenance drugs in the U.S. he got a six-month supply from India. The only problem with buying from India is that the package sits in New York customs warehouse for a month before transferring to the USPS for final delivery.

Bright Idea ?

[Crashmarik]

Even Lenin abandoned it for the New Economic Policy/plan
https://en.wikipedia.org/wiki/...

When Lenin thinks your idea is too communist, it's probably a bad idea.

Their job is to make money not to be fair

[Dr.Altaica]

It's more profitable to charge a few people a large amount instead of charging a few more people a smaller amount.
If they cut the price to one tenth the price then they have to sell ten times as much just to break even.

Reselling at lower price

[mjensen]

US sells software at $200 because if GDP, but it is $30 in Latveria. People will go to Latveria, buy all the copies and ship to USA to resell for a $150 profit each.

Re:Gouge the middle class to make them poor

[Ungrounded Lightning]

It sounds more fair when you say charge less in poorer countries. However when you turn it around, it is gouge the people in less poor countries.

Especially given that GDP is not evenly distributed among the population. The bulk of the added revenue from technology driven productivity improvements (at least in the US) has gone to the denizens of the C suites and the government, not to the workers. GDP has soared while real-inflation adjusted after-tax income has stagnated or dropped for decades.

That's much of why a nuclear family in the '50s got along fine on a single income and a two-parent family now involves both parents working and the kids in child care, and the bulk of kids are in "non-traditional" family arrangements and/or on some form of public assistance.

So "gouge the developed world's middle class" is indeed what such a GDP-based scheme would accomplish.

The Supreme Court is why it won't work.

[SEE]

An approximation of this was done by many publishers with textbooks. The result was importation of the cheaper overseas editions of textbooks into the US. And the US Supreme Court ruled that the First Sale Doctrine covers imported copyrighted works.

Bad Idea

[blindseer]

If this is a government imposed price control then not only is this a bad idea but one that has lead to the destruction of entire nations and killed many. Price controls enforced by the government do not allow the market to adjust pricing to meet supply and demand. Without proper market pricing we get hoarding, black markets, etc. Price controls is socialism. In socialism people wait in lines for bread, in capitalism bread is lined up waiting for people.

If a company chooses to control prices based on local markets then expect much of the same. If software is cheap in some nation where people don't make much money then expect a black market to pop up to buy low locally and then sell high somewhere else. Software makers can try to enforce this GDP based pricing with location enforcement of some kind but that's not too difficult to fake for the properly motivated.

Didn't textbook publishers already try this? They'd sell textbooks in other English speaking nations for cheaper than in the USA in order to compete better and/or comply with socialistic price controls on books. They tried putting different covers on those books but that didn't stop people in the USA from buying them, the content was still the same. Efforts to make the content different enough to matter costs money, negating any profit motive in selling the same books at different prices.

I cannot fault people for wanting to make a profit on their products. What they seem to fail to understand is that the world has gotten a lot smaller. I've gone to online retailers and orders products from Taiwan and Australia before. They arrived in my mailbox a week later. If I ordered from a domestic seller I'd sometimes get it overnight, and that has some value to me. If the price difference is large enough I'll wait that week if I can.

When talking about bread, textbooks, and so on this is a physical product. Software is not a physical product, the media might be but when is the last time you saw actual media in a software box? When was the last time you actually bought a "box" of software?

Just a bad idea. If actually implemented anywhere I'd expect it to die quickly.

Re: Gouge the middle class to make them poor

[__aaclcg7560]

Many people worry more about quality control with Indian pharmaceuticals.

My father had no problems with the drugs he ordered from India every six months for five years.

Offshoring

[craXORjack]

Yes, if this idea were implemented, it would just make it even more economical to cut tech jobs in the first world countries and send that work to the third world where both labor and now licenses for software tools would be much cheaper.

Insert 25c; Slashdot the Great tell your fortune

[mattwarden]

> This presupposes the continuing existence of closed-source software businesses

Slashdot: declaring the imminent doom of proprietary software for 20 years

The problem was caused by government...

[LoyalOpposition]

is there a way to make that pricing more fair?

Reduce copyright duration to two years and the "problem" will go away.

~Loyal

Umm. Because of economics, stupid

[monkeyzoo]

> Why don't software makers look at the average income level in a given country -- per capita GDP for example -- and adjust their software prices in these countries accordingly?

Because that's not how supply and demand works.
For the same reason that iPhones and Honda's aren't pegged to GDP... the costs of R&D and production don't change and make a product less costly to produce because it is sold in a country with lower GDP.