Exchange Rates

November 27, 2008 | Filed under: business

Do you want to be a currency speculator? Because if you are outside the USA and considering a career doing what I do, you might have to become one.

Most games sales come from the US, and generally people tend to price their games in dollars. Plus, most of the big sales portals charge in dollars, and (more importantly) pay the developers in US dollars. I’m in the UK, and this means two big things.

  • I have to pay a fortune each time in bank fees when the money gets converted into UK Pounds
  • I am at the mercy of exchange rates.

Recently, the pound and the dollar have been all over the place. here is a 3 month chart:

Generally it’s been good news, because a stronger dollar and a weaker pound means I earn more for each game I sell in the US.  However it’s not that simple, because I tend to pay for my advertising in dollars. Advertising is my major expense, once the games are done, so it really matter if the adverts are suddenly 20% more expensive than they were a week ago. As a result, one of the many parts of my daily routine is to keep an eye on the exchange rate to see if now is a good time to stick some money in the advertising account and get a few free dollars (effectively) by ‘picking my moment’.

If I was really organised I’d probably have a US bank account that people could pay into (in dollars) and avoid a lot of currency-changing fees. Does anyone know how easy it is for a UK busienss to open a US bank account?

5 Responses to “Exchange Rates”

  1. MrNice says:

    Just ask you bank manager. I am in France but it must be the same in the UK. In some banks, you can open us$ account.

    BTW at the moment the £ is really really crap (this is why you might think that the $ is so strong). I have a lot of money in the uk and for the last fews years the pounds has been falling and falling and falling…. compare to the euro.

  2. Hey cliffski, do you think you could write a blog post about your advertising techniques? I am curious where you are advertising and what some of the best practices are. Does it pay off?

  3. James says:

    I don’t know about the UK, but we definitely have such US bank accounts in Canada. I have one at one of the major banks here.

    The other thing you might be able to do is get a US dollar credit card. That way you can put all your US expenses on it and pay it from your US bank account. For me, basically all my business expenses are in US dollars. This would work out much better than swapping out and then back into US dollars (which means the banks take their ridiculous exchange rates in both directions).

    I have also found that it can be worth it to use a currency exchange company instead of a bank. Some of them will take a fraction of a percent instead of 2-3% above market rates that the banks take.

  4. cliffski says:

    I asked at my bank about all this, and although I can easily open a dollar bank account, the interest rates on the dollar accounts are horribly low, which almost cancels out the benefit of picking my moment in terms of transferring the money. What I have started doing is storing some of my income in a paypal dollar balance, and then I will be able to use that money on advertising, and save a bit of currency fees that way.