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Steam Regional Pricing and VAT vs Sales Tax

In estimating the value of localizations in a region, or the return on investment of paid advertising, it’s important to remember that units sold/wishlists added are not the end goal themselves. Instead, both the profitability and steam visibility result after release are dependent on sales revenue, and this differs greatly between countries

Regional Pricing

Steam has a suggested regional pricing structure. This can differ, but as a few examples:

Players from Argentina will pay about 12% of the US price

Players from Turkey will pay about 18% of the US price

Players from Russia will pay about 25% of the US price

Players from Brazil will pay about 35% of the US price

You can opt out of this, but there’s a good chance you will not sell many copies in those regions. It’s a simple reality that US prices are unrealistic for much of the world.

Because of EU legal rules, Eastern European countries must have the same price as the far wealthier Western European countries. This too is unrealistic given local incomes, and so you should expect that many Eastern European customers who wishlist a game will only convert when the game is on deep discount.

VAT vs Sales Tax

When a US customer buys a game, they pay an additional amount on top of the price, representing sales tax.

In much of the rest of the world, including Europe, there is instead a VAT, which is collected by Steam but is included within the price. This essentially means instead of the customer paying the tax, the game publisher/developer pay, reducing the sales revenue received.

For example, Russia has a 20% VAT. Combined with the regional price of 25%, the effective revenue from a Russian purchase is 20% of a US purchase.

As another example, suppose a game were priced at 39.99 USD and 39.99 Euros. You might think, based on exchange rates, the European customers are paying a higher price than US customers. But once you account for a 20% VAT, they are paying pretty much the same effective price.

Tim