How come the same products are priced differently in different countries? Like if a Snickers bar costs 2$ in the US it’ll cost 30 cents in Ukraine. Do companies loose money this way?

Question

How come the same products are priced differently in different countries? Like if a Snickers bar costs 2$ in the US it’ll cost 30 cents in Ukraine. Do companies loose money this way?

In: Economics

Answer 1

There are a lot of coats that go into the price of a snickers bar. The store rent, the store upkeep costs (cleaning etc), store staff wages, the distributor’s warehouse rent, the distributor’s staff wages, etc etc.

These are almost all going to be substantially higher in the US. So the price you need to sell a snickers for to make money is going to be higher.

Then there’s what the market will bear. The disposable income of your customers and demand for the product will drive what you can price it at to maximize your revenue. This can be very situation dependent- eg at a sports arena you’re gonna expect to fork out a lot more for a snickers than at a Walmart.

So both stores in your example are making money, but the store in Ukraine can’t raise their prices to match the ones in the US, and the store in the US can’t lower their prices to match the one in Ukraine.