This is one mistake many Nigerian merchants make

This is one mistake many Nigerian merchants make: convert US dollar-based pricing and ask customers to pay the Naira equivalent. The thinking is like this: if your product goes for N50,000 or $140 when the US dollar is exchanged at N400/$, if the exchange moves to N500/$, you have to go and increase that N50,000. That is wrong.

That confusion is why I get this type of inmails: “On your advert on Tekedia  Diploma programmes, you said $100 or N36,000.00. I thought the exchange rate is now above 400 naira per dollar?”

In Tekedia Mini-MBA, we have three different pricing courses from leading experts; pricing efficiency is very important in any business.  That Naira is falling must not mean that my Nigerian customers must be asked to pay more if that fall of USD does not affect my marginal cost and broad cost of production.

More so, that Naira is losing value to USD does not mean that those earning local currency (Naira) suddenly have more Naira. So, if you have a product at say $100 or N36k when the exchange rate was N360/$, and Naira has dropped to N500/$, you cannot recklessly jack up prices unless there are clear production factors which would be affected.

So, when you see our pricing, it is not a typo. Microsoft does that all the time.  It costs me $99 per year on my personal Microsoft 365; some vendors can sell you for less than N7,000 ($15) in some African countries because it is easier to make $99 than make N7,000 ($15) say in Nigeria. If Microsoft translates that without considering purchasing power parity, it will miss its customer base.

Sure – that does not mean you cannot increase the price as currency erodes value. But it has to be done not just because some speculators are at work!

Register for Tekedia Mini-MBA (Jun 3 - Sep 2, 2024), and join Prof Ndubuisi Ekekwe and our global faculty; click here.