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I wrote a tool to calculate product or service prices for different parts of the world based on the Big Mac Index (the price of a local mcdonalds lunch burger).

I wrote a tool to calculate product or service prices for different parts of the world based on the Big Mac Index (the price of a local mcdonalds lunch burger). That method makes more sense to me because all your customers have a similar point of reference. McD is thought of as a premium product in some very poor areas, but on the whole they aim for mass market affordability, which makes it a fair comparison. https://bigmacpricing.com/ https://bigmacpricing.com/

vosper 6y ago
This is cool. I think it would be helpful if the input was in terms of units of currency, rather than Big Macs. Like: I want to charge €10 a month for my product in the EU. Use the Big Mac pricing model to tell me what that is in Brazil. According to your site, a Big Mac in the EU is €4.21 (is it really the same across all EU countries?) which means €1 buys you 0.237 burgers. €10 is therefore 2.37 burgers. At the current Brazilian price of 20.9 BRL per burger, you should charge 2.37 * 20.9 = 49.53 BRL (at the time of writing Google says €10 is worth 62 BRL)
- sudhirj 6y ago
  Yup, I need that too. Will add it in. The Euro zone is reported as a single economic zone in the index (it's published by the Economist). I'm not sure if the prices are actually exactly the same, but from an economic reference point of view, they ought to be. I'm sure there are differences in the prices within each city that McD operates in as well... the currency prices are probably an average.
  - dsomers 6y ago
    I assure you, a Big Mac in the Netherlands will cost more than a Big Mac in Latvia.
- Semaphor 6y ago
  > According to your site, a Big Mac in the EU is €4.21 (is it really the same across all EU countries?) Just googled prices for Germany: Apparently it’s €5.29 here.
- ivanhoe 6y ago
  > is it really the same across all EU countries? Nope, not at all. Even prices within the country are not the same, e.g. in Croatia the price on the seaside is a bit higher than the prices in Zagreb (the capitol). For comparison, in Zagreb BigMac is under 3 euros, while in say Barcelona it's around 4e. In Denmark it's close to 5, if I remember correctly. It's following fairly closely the local salaries and taxes.
- PaulDavisThe1st 6y ago
  The statistic you're looking for is called "purchasing power parity" or PPP.
  - vosper 6y ago
    Thanks, I've long since forgotten most of my Econ courses from uni :)
L_226 6y ago
Nice! have you thought about making this available as an API? :)
- sudhirj 6y ago
  Probably will, but I’m struggling to see why folks would want an API for data that doesn’t change much at all. I could publish all the numbers as a JSON, not sure if anything else is necessary.
Yizahi 6y ago
BigMac index looks like nice idea but it is wildly off eventually. It's price converted to the common currency will vary by tens of percents, while actual purchasing ability by country will vary by hundreds of percents or more. This index unfortunately fails at it's main and sole purpose. In fact the majority of times BigMac index is mentioned in media is in the reverse calculation - assuming that BigMac price is more or less "fair" per country journalists calculate how actual salaries or prices in the country stray away from this indicator, to show severity of economic problems.
- sudhirj 6y ago
  So pretty much all measures or indexes are inaccurate in that light. The reason I like it is that it takes a product that’s priced proportionally to local labour and commodities, is globally recognisable and serves as an easy frame of reference. For products and services that have near zero marginal costs. Saying something is worth 2 cups of coffee, for instance, is useful but our coffee prices might differ by an order of magnitude. But McD is always a middle class lunch wherever they run. The other alternative I can think of is Coca Cola. That would also be an interesting index.
fbelzile 6y ago
My trick for international pricing was to copy Microsoft. Minecraft in the US sells for $26.99 USD [0] Minecraft in the UK sells for £22.49 GBP [1] or about $29.60 USD (+9.22%) Minecraft in Mexico sells for $479.00 MXN [2] or about $22.18 USD (-19.56%) Surely, if it's good enough for Microsoft, it's good enough for a company of one. The Big Mac index, while provides similar results, is a bit too disconnected from the cultural attitudes towards paying for software. [0] https://www.microsoft.com/en-us/p/minecraft-for-windows-10/9nblggh2jhxj https://www.microsoft.com/en-us/p/minecraft-for-windows-10/9... [1] https://www.microsoft.com/en-gb/p/minecraft-for-windows-10/9nblggh2jhxj https://www.microsoft.com/en-gb/p/minecraft-for-windows-10/9... [2] https://www.microsoft.com/es-mx/p/minecraft-for-windows-10/9nblggh2jhxj https://www.microsoft.com/es-mx/p/minecraft-for-windows-10/9...
- leoedin 6y ago
  That price is not really based on mass market affordability though. The UK GDP per capita is $43k USD and the US is $63K USD. The average salary in the UK is $38k/year and the average salary in the US is $63k. By all measures the UK is a significantly less wealthy country. Perhaps Microsoft choose their pricing based on other measures.
  - PaulDavisThe1st 6y ago
    "average" is a particularly weak measurement of almost anything. As is often noted when <insert-world's-richest-person-here> walks into a bar, on average everyone in the bar is a millionare. You can't make a direct comparison of "wealth" by looking at salaries. You have to take into account purchasing power parity, for a start. But then you also have to find a way to include the somewhat non-linear results of tax rates and services provided by those taxes. For example, the typical US family of 4 spends $23k a year more on healthcare than the equivalent family in France.
edpichler 6y ago
Just an information so may you do not rely too much on the Mac index. The Mac is expensive in my country, for instance, just because of crazy tax rules. It's fancy to eat on Mac Donalds here. It does not tell us about purchasing power in any way. I wish it would be that simple.

vosper 6y ago

This is cool. I think it would be helpful if the input was in terms of units of currency, rather than Big Macs. Like: I want to charge €10 a month for my product in the EU. Use the Big Mac pricing model to tell me what that is in Brazil. According to your site, a Big Mac in the EU is €4.21 (is it really the same across all EU countries?) which means €1 buys you 0.237 burgers. €10 is therefore 2.37 burgers. At the current Brazilian price of 20.9 BRL per burger, you should charge 2.37 * 20.9 = 49.53 BRL (at the time of writing Google says €10 is worth 62 BRL)

sudhirj 6y ago
Yup, I need that too. Will add it in. The Euro zone is reported as a single economic zone in the index (it's published by the Economist). I'm not sure if the prices are actually exactly the same, but from an economic reference point of view, they ought to be. I'm sure there are differences in the prices within each city that McD operates in as well... the currency prices are probably an average.
- dsomers 6y ago
  I assure you, a Big Mac in the Netherlands will cost more than a Big Mac in Latvia.
Semaphor 6y ago
> According to your site, a Big Mac in the EU is €4.21 (is it really the same across all EU countries?) Just googled prices for Germany: Apparently it’s €5.29 here.
ivanhoe 6y ago
> is it really the same across all EU countries? Nope, not at all. Even prices within the country are not the same, e.g. in Croatia the price on the seaside is a bit higher than the prices in Zagreb (the capitol). For comparison, in Zagreb BigMac is under 3 euros, while in say Barcelona it's around 4e. In Denmark it's close to 5, if I remember correctly. It's following fairly closely the local salaries and taxes.
PaulDavisThe1st 6y ago
The statistic you're looking for is called "purchasing power parity" or PPP.
- vosper 6y ago
  Thanks, I've long since forgotten most of my Econ courses from uni :)

L_226 6y ago

Nice! have you thought about making this available as an API? :)

sudhirj 6y ago
Probably will, but I’m struggling to see why folks would want an API for data that doesn’t change much at all. I could publish all the numbers as a JSON, not sure if anything else is necessary.

Yizahi 6y ago

BigMac index looks like nice idea but it is wildly off eventually. It's price converted to the common currency will vary by tens of percents, while actual purchasing ability by country will vary by hundreds of percents or more. This index unfortunately fails at it's main and sole purpose. In fact the majority of times BigMac index is mentioned in media is in the reverse calculation - assuming that BigMac price is more or less "fair" per country journalists calculate how actual salaries or prices in the country stray away from this indicator, to show severity of economic problems.

sudhirj 6y ago
So pretty much all measures or indexes are inaccurate in that light. The reason I like it is that it takes a product that’s priced proportionally to local labour and commodities, is globally recognisable and serves as an easy frame of reference. For products and services that have near zero marginal costs. Saying something is worth 2 cups of coffee, for instance, is useful but our coffee prices might differ by an order of magnitude. But McD is always a middle class lunch wherever they run. The other alternative I can think of is Coca Cola. That would also be an interesting index.

fbelzile 6y ago

My trick for international pricing was to copy Microsoft. Minecraft in the US sells for $26.99 USD [0] Minecraft in the UK sells for £22.49 GBP [1] or about $29.60 USD (+9.22%) Minecraft in Mexico sells for $479.00 MXN [2] or about $22.18 USD (-19.56%) Surely, if it's good enough for Microsoft, it's good enough for a company of one. The Big Mac index, while provides similar results, is a bit too disconnected from the cultural attitudes towards paying for software. [0] https://www.microsoft.com/en-us/p/minecraft-for-windows-10/9nblggh2jhxj https://www.microsoft.com/en-us/p/minecraft-for-windows-10/9... [1] https://www.microsoft.com/en-gb/p/minecraft-for-windows-10/9nblggh2jhxj https://www.microsoft.com/en-gb/p/minecraft-for-windows-10/9... [2] https://www.microsoft.com/es-mx/p/minecraft-for-windows-10/9nblggh2jhxj https://www.microsoft.com/es-mx/p/minecraft-for-windows-10/9...

leoedin 6y ago
That price is not really based on mass market affordability though. The UK GDP per capita is $43k USD and the US is $63K USD. The average salary in the UK is $38k/year and the average salary in the US is $63k. By all measures the UK is a significantly less wealthy country. Perhaps Microsoft choose their pricing based on other measures.
- PaulDavisThe1st 6y ago
  "average" is a particularly weak measurement of almost anything. As is often noted when <insert-world's-richest-person-here> walks into a bar, on average everyone in the bar is a millionare. You can't make a direct comparison of "wealth" by looking at salaries. You have to take into account purchasing power parity, for a start. But then you also have to find a way to include the somewhat non-linear results of tax rates and services provided by those taxes. For example, the typical US family of 4 spends $23k a year more on healthcare than the equivalent family in France.

edpichler 6y ago

Just an information so may you do not rely too much on the Mac index. The Mac is expensive in my country, for instance, just because of crazy tax rules. It's fancy to eat on Mac Donalds here. It does not tell us about purchasing power in any way. I wish it would be that simple.