Could Your Non-U.S. Business Tank Along with the U.S. Dollar?
Since I began my online business in 2002, I've been losing money. Yes, the numbers have been getting higher, but because I'm Canadian and earn U.S. dollar commissions and sell in U.S. dollars...I've lost a huge amount of money.
In 2002, I was making approximately $1.60 CAD for every U.S. dollar I made. Things were awesome. Then on November 3, 2004, I lamented on my blog about the dropping exchange rate, which was 1.191 that day. That meant, I lost about 40 cents per dollar at that time.
And it's getting worse and worse.
According to a number of forecasts, including this one at Bloomberg.com, they expect that the Canadian dollar to gain even more in relation to the U.S. dollar. According to the article:
Canada's dollar may extend gains from a 28-year high toward C$1.09 versus the U.S. currency, said RBC Capital Markets, citing charts that predict currency movements.
In 2002, I was making approximately $1.60 CAD for every U.S. dollar I made. Things were awesome. Then on November 3, 2004, I lamented on my blog about the dropping exchange rate, which was 1.191 that day. That meant, I lost about 40 cents per dollar at that time.
And it's getting worse and worse.
According to a number of forecasts, including this one at Bloomberg.com, they expect that the Canadian dollar to gain even more in relation to the U.S. dollar. According to the article:
Canada's dollar may extend gains from a 28-year high toward C$1.09 versus the U.S. currency, said RBC Capital Markets, citing charts that predict currency movements.
I'm no economist, but losing another 5% of my income isn't too cool with me. I have considered charging Canadian dollars for my products - but the majority of my customers are American. I wonder if the potential loss in sales would exceed the loss in the currency exchange. Then, a huge chunk of my income is from affiliate sales, and with very few exceptions, they all pay me in U.S. dollars. Even the Canadian companies I'm affiliated with pay in U.S. dollars.
If you're a non-U.S. business person, dealing in U.S. dollars, how do you plan to handle this? And if you're a U.S. reader, how do you feel about making purchases in other currencies?
6 Comments:
I know what you mean. Getting paid in US dollars is no fun when you have to convert it to GBP (Sterling).
I get my affiliate checks in the mail and they look really good until I deposit them in the bank... also I'm charged a certain amount for each foreign check I deposit which really hurts too.
Like you say Alice the majority of my sales are also from the US so I guess there's not much we can do about it :(
I agree it is frustrating, I'm converting to euro's so I have a similar problem. But on the flip side when I go to purchase a product I tend to think in euro's as in, it costs $50 so I have €50 in my head but when the charge comes through and it's less it's a nice surprise :) (I'm normally a logical person, but logic goes out the window at this stage and I just like to think I'm getting good value !)
You need to move to the states ;) Teasing of course. That really stinks Alice :(
The long term dollar trend is one factor that motivates me to keep testing and tracking - even minor improvements month by month will ensure your growth trend is greater than the dollar decline.
A related issue is the extreme credit card debt, credit bubble etc. This could have a greater impact on sales to the U.S. me thinks.
So, why do we think that U.S. dollars seem to be the online standard for companies selling internationally? Is it because the U.S. is the largest market of online purchases...or is it because they, at one time, had a very strong dollar?
I kind of think it has more to do with the former, but if it was the latter - it would certainly be time to make a change.
Anonymous - definitely keep working to exceed the difference in the exchange, but wouldn't it be great to increase your revenues WITHOUT losing some of it in the exchange rate.
AHHH...one can only dream.
Yes, you're right, but you're just looking at it in the opposite way than me, Derrick. You say I made more money because the U.S. dollar was high. I say I'm losing money because the U.S. dollar is losing value.
This predicted exchange rate that I linked to a 28 year high for us...so it's very unusual and is definitely affecting my bottom line. No, it won't put me out of business...but it certainly is frustrating.
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