Software Developers Try Lower Prices to Fight Chinese Pirates

Some finally realize it doesn’t make sense to charge nearly US-style prices in a country with a paltry per capita GDP of $6,600 compared to $46,000 in the US.

The one of the more nerve wracking facets of the war on piracy has long been copyright holders’ insistence on charging prices in a given country that has no bearing in economic reality.
For example, Apple’s iTunes is a global digital music retailer, yet charges customers the same prices regardless of where they live and what they can actually afford. The people of Malawi, which has a per capita GDP of $800, are expected to pony up just as much as the guy from the US where the per capita GDP is $46,000.
It’s the reason why so many people in foreign countries turn to piracy to acquire content, and makes copyright holder claims that piracy causes hundreds of billions of dollars in lost overseas profits seem all the more irrational. It isn’t a “lost sale” when the choice is between the bare necessities and the latest Lady Gaga album.
Pricing is the key to fighting piracy, and according to the Wall Street Journal, a number of software companies, Microsoft and Autodesk in particular, have finally figured this out.
For example, the price for Autodesk’s AutoCAD 2011 program begins at $3,975 in the US. The prices it used to charge in China were about 20% to 30% less, but even at $2782.50 for AutoCAD 2011 (30% off) piracy was still a far more attractive option. So this past July Autodesk decided to make them 50% less than those in the US, and its sales more than doubled.
Microsoft used to think there was no way to compete with street vendors peddling copies of its popular operating systems for as little as a dollar or two, but after dropping prices for a stand-alone version of Windows 7 Home Basic to about $59, compared to $nearly $200 in the US, it “definitely” saw added sales.
“When you have a lower price your margin gets squeezed,” said Simon Leung, Microsoft’s chief executive for greater China. “But “we have so much room to improve, so the volume will make it up.”
Regional pricing has been a concern for countries for some time now, especially as US copyright holders make piracy an issue year after year.
Last year Brazil and Pakistan criticized the US for not realizing that each country has a different economic reality and that pricing should be adjusted accordingly.
“Quite clearly, business models are not adequately addressing the pricing-cost issues involved in selling products,” said Ali Asad Gilani, first secretary of Pakistan’s delegation, at a meeting of the World Intellectual Property Organization last November. “Unreasonably, higher costs along with barriers to access, do provide some justification to the consumers to use counterfeit and pirated goods.”
With almost half the world – over 3 billion people – living on less than $2.50 a day, it’s hard to disagree.