Solved

How can geolocation-based pricing benefit your eCommerce store?

adrienshendev
Excursionist
20 0 4

I'm a developer and for my first APP for Shopify, I decided to build a Shopify Embedded App that Merchants can choose products that gives discounts based on Customers geolocation. I've seen custom made eCommerce stores offer discounts based on the lower purchasing power of some countries and thought this is a neat feature to could potentially make it possible for more people to buy a product based on their relative purchasing power. Of course it works better for information products like courses that have high margin. Would any Merchants want to use an APP like this if it was made?

 

Or suggest a better idea as an alternative?

 

Cheers.

Accepted Solution (1)
Dan_Bernard
Explorer
56 1 47

This is an accepted solution.

That sounds easy. the problem is, until a customer starts checking out and enters their address, the site doesn’t know where the customer is based, so can’t calculate VAT appropriately.

You’ll respond by saying "use Geolocation based on IP address”, but this isn’t at all foolproof: a customer might be buying while in another country on a business trip or holiday, or be a middle-eastern customer who will ship an address in the store’s country to get low shipping rates & then use a consolidator to forward to the middle east (happens a lot). Or might be locally-based but sending to a friend abroad as a gift, or to a holiday home.

View solution in original post

Replies 46 (46)

danielpirciu
Excursionist
17 1 4

Just be aware that this topic is a very sensitive one. With geo-blocking forbade in EU, the pricing based on location can't have a better future.

Also, remember the Orbitz mistake. They noticed that Mac users were open to spending up to 30% more on bookings, so they've started to display different prices.

And yes, eventually their visitors found out, and they didn't like it.

 

Although, a discount could be interesting. A discount based on specific events in that country - Public holidays, local events, etc.

Empowering e-commerce entrepreneurs by providing them with affordable, optimized and easy to use tools | Vitals 40+ Shopify Apps in One
adrienshendev
Excursionist
20 0 4

Yes, I am thinking in terms of mainly a discount feature. The geo-targeted price will never be higher than the original price of the product.

 

I've seen this feature on digital products in the past such as courses. Eg. If a course sold for 100$, for countries like Thailand where the the average monthly salary is 750$, That person would never be able to justify paying 100$ for the product which is 14% of the persons' monthly income. On the other hand, the seller loses a chance to make the sell on a essentially infinite margin product.

adrienshendev
Excursionist
20 0 4

Oh that's really neat. Thanks!

Yansate
Visitor
2 0 0
Yes please for USA States

Margaret_Keough
Tourist
6 0 0

Yes.  

 

In order to provide "free shipping" (which is expensive because long distances) my prices are set to US prices including shipping.  But, there is demand where the product is made in the Philippines, and I would like to set much lower prices, just in that one country, because rather than US$40 delivery, it's US$5.   

 

So rather than tiered pricing, same pricing plus shipping cost included for shipping to the appropriate market.  I don't want to the customer to see the high shipping cost.

 

adrienshendev
Excursionist
20 0 4

Hey, that's an interesting use case.

 

Isn't the shipping price already adjustable based on Country of customer though?

 

Is your store public, would like to take a look to get a better idea.

Margaret_Keough
Tourist
6 0 0
I'm trying to direct ship from the Philippines, so I have estimated
shipping prices

This applies to 90% of my SKUs. +is dollars added to the price. This is DHL
shipping, but may also add in duty and deliver duty paid to customer.

SEA +10
Rest of Asia + Australia +20
North America +40
Europe +50

So there is one app where I can have different prices based on IP address.

I can hack with a currency converter, by fixing the exchange rate to get
closer to normal price with shipping. (if actual FX is 50:1, use 20:1, or
instead of 1.35:1, 1.10:1)

But, this doesn't help me for SKUs with higher shipping.


tanseyt
Visitor
2 0 0

Hi, which currency convertor app did you use? Thanks!

Dan_Bernard
Explorer
56 1 47
Hi. We use Shopify’s own functionality, no app
Dan
mcalderonq
Visitor
2 0 0

I was exactly looking for this!

Have you find a way to make it happen?

 

In my case, it is Mexico I want to make cheaper prices!

auerhahn
Tourist
7 0 2
For now no ideal Solution. I use now the App https://apps.shopify.com/geo-targeting?locale=de and show geo targeted popups. The App Can also Apply discount Codes automatically but it would be much better to have the prices reduced
adrienshendev
Excursionist
20 0 4

What is your ideal solution? We are launching soon but would like to add some more features and get feedback.

auerhahn
Tourist
7 0 2

An ideal solution for me would include the possibility to reduce all prices by e.g. 15.9%, which corresponds to the value of the VAT. The target is to show customers outside EU net prices, despite having set up Shopify to show prices including tax.

Would be nice if can provide me with updates on your development

Best regards,
Tobias

Dan_Bernard
Explorer
56 1 47
Hi. I am not doing a development, I am just another long-suffering user seeking the same solution you are.

I wouldn’t hold your breath on Shopify providing a solution - I have been complaining about this for over 6 years. But being UK-based Brexit has made the issue more urgent as I expect to need to charge ex-VAT prices to all EU customers from next year. I will post on this thread if I find a solution - at the moment I am exploring apps that can give discounts based on user location, which may provide a way forward.

Dan
Not applicable

EDIT:

Can't this already be achieved with https://boldcommerce.com/custom-pricing ?

"AUTO-TAGGING: LOCATION

Automatically assign customers to specific tiers based on their location, showing different pricing to customers based on their country."

Or with: https://apps.shopify.com/country-pricing-auto-switch ?

@Dan_Bernard 

adrienshendev
Excursionist
20 0 4

@Anonymous Doesn't seem like Bold Custom Pricing has geolocation targeting. At least not on the feature's page.

Not applicable

s1.png

 

@adrienshendev 

 

I didn't see it on the Shopify app store page, but the feature seems listed on their own website.

Regardless, they don't seem to be the only ones offering this feature, hence my curiosity: what is missing from those apps as far as geo-targeted pricing is concerned ?

adrienshendev
Excursionist
20 0 4

Tobias,

That sounds like something the App can help with. So you would like to discount all customers outside EU by 15.9% right? I suppose providing a discount code like NOVAT if customers are detected to be outside EU would work? And in the settings, you can select "Apply to all countries outside Europe" to only customers detected to be outside EU.

If possible, I would also like to get a deeper understanding of your use case via a 10-20 minute chat. You can contact my email here: shan(at)sequelcommerce(dot)com, and will add you to our list to send updates on development.

Davi_Marra
Shopify Partner
2 0 0

Helo @adrienshendev @Dan_Bernard , any news on this? i've sent you an email to be added in the list to get updates but no one replied me. Could someone work that out? Have you built an app to solve this problem or have you found one wich solves?
Thanks, Davi

adrienshendev
Excursionist
20 0 4

We haven't come up with a solution yet for this. It looks like there's too many variables in play here and it's not clear what the solution is. It's also not clear if Shopify would come up with a fix natively which would supercede the usefulness of the App.

If someone can come up with a definitive problem and solution regarding the UK VAT tax, then I'll have another look at it. My email is shan+shopify@sequelcommerce.com

RednBlack
Visitor
1 0 0
This is good idea

Dan_Bernard
Explorer
56 1 47

Hi, your idea might provide a neat solution to a problem I (and I suspect many other EU-based Shopify stores) have.  As you may know, within the EU consumer retail prices have to be displayed including VAT.  We therefore run our website with "my prices include taxes" set.   But even though we set all non-EU locations as zero tax (VAT is not chargeable on sales to outside the EU), the system still charges the same VAT-inclusive price even though the sale isn't taxable.  The result is the overseas customer doesn't get the VAT taken off, but still pays the customs VAT/GST charges levied by customs on import.  This is a big problem in selling to such customers.

 

We tried to get around this by switching to ex-VAT pricing, but with our theme modified to recalculate prices to include VAT when displaying on the website (this is an approach suggested by the Shopify support pages). The problem we found (carefully NOT mentioned by the Shopify support pages) is that we get rounding errors when the ex-VAT prices are translated into with VAtT prices at the checkout - eg a £2 and a £3 item adds up to £5.01.

 

Your app would enable another approach - offer a discount equal to the VAT component (ie 16.67% off the with VAT price), to any customer coming from a non-EU country.  Since the UK exits the EU at the end of this year, this feature would be even more useful as it could then be applied to all non-UK customers.

 

Ideally the app would also enable the display of ex-VAT prices for such customers in addition to the normal VAT-inclusive price, and would be compatible with Shopify's new multi-currency feature.     

adrienshendev
Excursionist
20 0 4

Cool, that does sound like a good idea especially with UK exiting. We can try that.

 

Can we contact you if I have any more questions about the implementation to make sure we get it right? Would also like to test out going through checkout from your store to get a better idea of the feature you're describing. I'm from the US, so should experience the rounding error.

 

Do you know any others who may have the a similar problem as this?

Dan_Bernard
Explorer
56 1 47
Hi, great to hear you’re interested. Very happy to be contacted and to review specs, participate in testing, etc. - I have an IT background so should hopefully be able to help.

Contact details are:

email: dan@shadowhorse.co.uk
cell: +44 7721 885670
Cell is also contactable via FaceTime & Whatsapp.

In terms of others who might be interested, I have participated in a conversation on the Shopify Forum complaining about the issues with Shopify handling of VAT for Europeans - almost all UK posters. If we get something working I’ll post back onto that conversation to alert others to the solution.

Look forward to hearing more.

Dan
auerhahn
Tourist
7 0 2

Any news on this? Would be very neat to have this feature...

greghuntoon
Shopify Partner
4 0 1

Dan, would you mind me asking what you've done between March and now to solve for this problem? One of my main clients is suffering the exact same pains, and trying to figure out the best way through. Would love to know what others are doing, and honestly, you're the first person that I've read is dealing with the problem they are, word for word. I stumbled on this post for the same reason you did. An app that allows us to set our prices based on different regions/zones and for that to be handled dynamically with geo-sniffing would be fantastic.

Dan_Bernard
Explorer
56 1 47
Hello, Greg. Our story on this is as follows:

1. Until Brexit, the problem was focused on orders from overseas customers, as sales to EU customers were VATable just like UK sales. Having reported the problem to Shopify support and gotten a very clear indication that they understood the problem but were unlikely to do anything about it in the forseeable future (this was back in 2014), we evolved a strategy of compensating for charging inc. VAT prices by subsidising the shipping costs. The “delivery” page on our website explains this:

"Shipments to destinations outside the EU (including Channel Islands): VAT is not chargeable, but our system charges the same selling prices. In compensation for not deducting the VAT component, we heavily subsidise our shipping charges for non-EU destinations. For Channel Islands orders we charge standard UK rates, for overseas orders we charge the same rates as for European shipments - in both cases our charges are much lower than our cost.”

This seems to have worked reasonably well, though it’s difficult to know how much sales we lose from overseas customers who either don’t understand or don’t accept our policies.

2. The problem that now arises is with sales to EU customers, which UK VAT rules will treat exactly the same as overseas orders from Jan 1st 2021. The approach we had developed on this was to switch to a carrier for shipments to EU customers who would allow us to specify that VAT and duty charges on import to the EU country involved should be charged back to us, rather than to the end customer. The UK VAT savings would roughly subsidise the payment of the import VAT and duty, given VAT in most EU countries is around the UK’s 20% level, and duties for our products are pretty small.

However, all this has been overtaken by our discovery that the EU is planning to extend the VAT regime already applied to sales of digital products into the EU, to ALL e-commerce sales. This will mean that the seller will become responsible for calculating, declaring and paying import VAT to the relevant EU country of import, rather than the customer paying on import. The EU VAT MOSS (VAT One Stop Shop) mechanism that already exists for digital sales will be extended to all e-commerce sales, allowing the non-EU retailer to declare and pay VAT for all BtoC e-commerce exports to the EU in one place.

This chnage was originally planned to come into effect on Jan 1 2021, conveniently linking to the end of teh transaition period. It has now been delayed until July 2021 to extned the time for preparations due to the pandemic. That will leave an awkward 6 months but after that the Shopify policy of charging VAT-inclusive prices everywhere will no longer be a problem for EU sales, as the UK VAT included in the prices will roughly pay for the VAT due to the EU destination country.

I hope all this helps.

Dan
Georgiaevarae
Tourist
9 0 0

We are now experiencing this issue as we are in the UK. After Brexit we need to remove the VAT from being included in the RRP for eu customers, as the VAT is now due in the import country to the customer. So far shopify have no suggestions to fix this. I have tried two apps but they aren’t really compatible with stores that need to hold the inventory combined or sell on other platforms like Instagram. Help! 

Dan_Bernard
Explorer
56 1 47
Hi, Shopify have in fact solved this problem. If you look at your tax settings, there is a new tick-box in the settings at the bottom entitled "Include or exclude tax based on your customer's country”. My understanding from the Shopify documentation is that if this is ticked, for destinations which are set as "tax not collected’ the price charged will be the VAT-exclusive price - it your normal published prices divided by 1.2
Georgiaevarae
Tourist
9 0 0

I too thought this was the solution, however I’ve just been through the set up for taxes with shopify support and the prices didn’t reduce for EU countries, nothing happened. The support agent said she’d speak to the tax team and the came back to me on email to say intact we needed to install one of the apps (that are compatible for our business) along side it and there I am back to square one. 

that this tax feature is more for reporting accounts rather than changing the price at the checkout. Seems weird, maybe I should try again. 

From you post above, it looks like this won’t be a problem from July, when the ‘one stop shop’ comes into play.......

Georgiaevarae
Tourist
9 0 0

Sorry some typos there! The apps “aren’t” compatible because we sell across Facebook etc. 

auerhahn
Tourist
7 0 2

Hey Dan_Bernard,

good news, the solution it works for me. Prices are displayed without taxes once you give address details and go to 2nd Checkout Step. I've set up taxes for the countries where taxes are not applicable.

 

 

Georgiaevarae
Tourist
9 0 0
Hi Dan,

Can you advise if your prices include taxes inside the RRP and for the counties that are tax except it is then lowering the price?
Georgiaevarae
Tourist
9 0 0

Can you advise if your prices include taxes inside the RRP and for the counties that are tax except it is then lowering the price at check out, rather than adding? 

Also are you on shopify or shopify plus. Thanks so much really want to get this working but shopify said it doesn't work, how strange! 

auerhahn
Tourist
7 0 2

Hey,

My prices include taxes (See www.Auerhahn-Onlineshop.de) - and yes during checkout prices are then reduced to net prices. 

for Information - all 4 checkboxes in the Gay settings are marked in my Shop (those below country Settings)

Dan_Bernard
Explorer
56 1 47
Hello, Georgiavarae. My prices are set to include taxes but I am not using the new tick-box I referred to earlier - for now we are selling at VAT-inclusive prices into the EU, and using the VAT savings to pay the import VAt imposed on import to the EU.

So I can’t savings to pay or refund customers’ import VAT charges - that way they still effectively get VAT & duty paid shipping as it was pre-Brexit. This also avoids another big change - from a customer viewpoint - when the EU imposes a requirement for non-EU retailers to collect the EU VAT at sale point for all shipments under €150 - the same requirement the Uk has already imposed for non_UK retailers.

Dan
Georgiaevarae
Tourist
9 0 0

I thought about doing this and using the VAT included in the RRP to send by DDP and pay the import VAT, however being swimwear we have a fairly high return rate and would not be able to then get this back and the customer would expect a full refund. 

What a headache. 

Georgiaevarae
Tourist
9 0 0

Are you on shopify or shopify plus? Sorry for all the questions but shopify support could not get this working on my store. 

Dan_Bernard
Explorer
56 1 47
Shopify.
Georgiaevarae
Tourist
9 0 0

Me again 😞

Has anyone got the tax setup working at the checkout to lower RRPS for tax except counties...... with product size variants? 

anatomie
Tourist
9 0 3

Shopify seems to be completely broken at one of the few things it should do - handling prices properly...

It's not difficult: allow us to set product prices ex-VAT. Then update the displayed prices on the site with the VAT-rate of the customer's country.

Dan_Bernard
Explorer
56 1 47

This is an accepted solution.

That sounds easy. the problem is, until a customer starts checking out and enters their address, the site doesn’t know where the customer is based, so can’t calculate VAT appropriately.

You’ll respond by saying "use Geolocation based on IP address”, but this isn’t at all foolproof: a customer might be buying while in another country on a business trip or holiday, or be a middle-eastern customer who will ship an address in the store’s country to get low shipping rates & then use a consolidator to forward to the middle east (happens a lot). Or might be locally-based but sending to a friend abroad as a gift, or to a holiday home.
anatomie
Tourist
9 0 3

It's not perfect, but they could give customers the option of setting their shipping location before getting to the shipping page. Several websites have a little flag at the top right of the page.

Georgiaevarae
Tourist
9 0 0

it took me a while but I managed to set up my taxes so when an EU customer enters their address at the checkout, the price drops as it removes the 20% UK VAT out of the RRP, then Zonos calculates the import VAT due in their country. At least they aren't paying VAT twice now. In theory it is showing the same final price, just moving the UK VAT payment to  EU import VAT, showing them the breakdown and then they are paying it and we send DDP. Meaning when we refund they don't expect the hidden VAT back. 

Sadly a friend has tried the same and it's not worked for her as she set up her shipping locations differently when she set up her store,  she didn't set up a combined location for ROW (rest of the world) meaning she can't separate the EU to not collect VAT and leave places like the USA (ROW) to still have it included in the RRP. 

I guess this will all change again when the 'one stop shop' (IOSS) comes into play in July. 

Dan_Bernard
Explorer
56 1 47

Hi, your idea might provide a neat solution to a problem I (and I suspect many other EU-based Shopify stores) have.  As you may know, within the EU consumer retail prices have to be displayed including VAT.  We therefore run our website with "my prices include taxes" set.   But even though we set all non-EU locations as zero tax (VAT is not chargeable on sales to outside the EU), the system still charges the same VAT-inclusive price even though the sale isn't taxable.  The result is the overseas customer doesn't get the VAT taken off, but still pays the customs VAT/GST charges levied by customs on import.  This is a big problem in selling to such customers.

 

We tried to get around this by switching to ex-VAT pricing, but with our theme modified to recalculate prices to include VAT when displaying on the website (this is an approach suggested by the Shopify support pages). The problem we found (carefully NOT mentioned by the Shopify support pages) is that we get rounding errors when the ex-VAT prices are translated into with VAtT prices at the checkout - eg a £2 and a £3 item adds up to £5.01.

 

Your app would enable another approach - offer a discount equal to the VAT component (ie 16.67% off the with VAT price), to any customer coming from a non-EU country.  Since the UK exits the EU at the end of this year, this feature would be even more useful as it could then be applied to all non-UK customers.

 

Ideally the app would also enable the display of ex-VAT prices for such customers in addition to the normal VAT-inclusive price, and would be compatible with Shopify's new multi-currency feature.     

EdwardC23
Visitor
1 0 0

Thread starter knows exactly what I need.

My situation is like this. My store sells product A at $100 free shipping to anywhere in the world.


Let's say now we have two orders, one ships to US, one ships to the UK. COGS is 50

The cost to ship to the US is $40 so profit is $10
The cost to ship to the UK is $20 as it's nearer, so profit is $30.

 

But I'm happy with just a profit of $10, so if there's such an app that Adrien mentioned, that the website could display a price of $80 instead of $100 when a customer from the UK visits the store, then this could help with the conversion as this UK customer pays only $80 instead of $100.

 

Get it?

 

But i guess the app still isn't developed in year 2023 today? 

 

That existing MLVD app in shopify store achieve this by creating more SKU variants, which cause a lot of mess in the backend.

 

Still hoping for such app till to-date, hence stumbled upon this topic from google search