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> If EU countries had an ongoing inflation rate of 30%+, which would result in GCP/AWS costs for european companies go up insanely every year Inflation would m

> If EU countries had an ongoing inflation rate of 30%+, which would result in GCP/AWS costs for european companies go up insanely every year Inflation would mean that the nominal revenues of EU companies would also increase to the same extent. Thus, the affordability of the foreign service would, ceteris paribus, remain the same.

filoleg 2y ago
> Inflation would mean that the nominal revenues of EU companies would also increase to the same extent. Only if their customers are not from EU (aka their customers pay in USD instead of EUR) or if the company increases pricing to match the inflation on a regular basis (while managing to not lose any customers). With the first scenario being a very specific edge case, and the second scenario being borderline impossible, I don’t see the inflation being a nothingburger here. Otherwise, the Nigerian companies wouldn’t care about the inflation either.
- Archelaos 2y ago
  > Only if their customers are not from EU (aka their customers pay in USD instead of EUR) or if the company increases pricing to match the inflation on a regular basis (while managing to not lose any customers). Under standard conditions (nothing else then inflation matters), is the same for the domestic market. If we have x % yearly inflation, it means that the exchange rate at the end of the year is x % "higher", meaning the costs for the company are x % higher, but likewise the prices for companies's goods and services are x % higher and thus their revenues. So its profit margin (in percentage of its costs) remains the same. > Otherwise, the Nigerian companies wouldn’t care about the inflation either. The real problem is not inflation per se, but accelerated, unpredictable inflation. This ruins the exchange rates of a currency, as it is a risk that is not easy to manage. Due to these unfavourable exchange rates, companies from such countries are exposed to greater cost pressure when they purchase services in countries with a hard currency.

filoleg 2y ago

> Inflation would mean that the nominal revenues of EU companies would also increase to the same extent. Only if their customers are not from EU (aka their customers pay in USD instead of EUR) or if the company increases pricing to match the inflation on a regular basis (while managing to not lose any customers). With the first scenario being a very specific edge case, and the second scenario being borderline impossible, I don’t see the inflation being a nothingburger here. Otherwise, the Nigerian companies wouldn’t care about the inflation either.

Archelaos 2y ago
> Only if their customers are not from EU (aka their customers pay in USD instead of EUR) or if the company increases pricing to match the inflation on a regular basis (while managing to not lose any customers). Under standard conditions (nothing else then inflation matters), is the same for the domestic market. If we have x % yearly inflation, it means that the exchange rate at the end of the year is x % "higher", meaning the costs for the company are x % higher, but likewise the prices for companies's goods and services are x % higher and thus their revenues. So its profit margin (in percentage of its costs) remains the same. > Otherwise, the Nigerian companies wouldn’t care about the inflation either. The real problem is not inflation per se, but accelerated, unpredictable inflation. This ruins the exchange rates of a currency, as it is a risk that is not easy to manage. Due to these unfavourable exchange rates, companies from such countries are exposed to greater cost pressure when they purchase services in countries with a hard currency.