Orbx: international pricing strategy across 120 countries

An investor-backed brief for a global digital business

Orbx develops detailed scenery and other content for flight-simulation software, selling digital products to customers around the world through OrbxDirect. Its products serve a specialist audience, but that audience spans countries with very different economic circumstances.

In 2019, Bombora asked Pricing Insight to examine the market opportunity and identify how pricing, customer development and geographic expansion could support growth. The assignment connected a strategic pricing review with the questions an investor needs answered: how large is the accessible market, which countries deserve priority, and what would be required to convert potential demand into revenue?

Bombora’s subsequent reporting identified Orbx as an investment and highlighted product pricing and marketing as important growth priorities (Bombora’s June 2019 update). Pricing Insight’s work provided country-level evidence to inform those commercial decisions.

The challenge: global reach did not mean uniform demand

An online store can make the same product available worldwide. It does not make that product equally affordable, equally attractive or equally likely to be purchased in every country.

Orbx’s existing sales were also concentrated. The original analysis showed that approximately 80% of revenue came from the top ten countries and 90% from the top twenty, raising an important question: did smaller markets lack demand, or did they need a different pricing and market-development approach?

Answering that question required more than comparing population sizes or applying one global average. Pricing Insight needed to distinguish purchasing power, existing customer penetration and spending behaviour, then translate those differences into practical commercial choices.

The analysis: connecting prices, customers and country economics

Pricing Insight examined two years of Orbx’s internal data alongside country population and gross domestic product per person, used as an indicator of economic capacity. The analysis brought together:

• Prices and purchasing behaviour: Revenue, units sold, average price per unit, annual revenue per paying customer and the number of products purchased per customer.
• Customer penetration: Paying and non-paying users, the proportion of users who purchased, and paying-customer penetration relative to each country’s population.
• Country economics: Population and GDP per person, allowing markets to be compared in the context of purchasing power rather than size alone.
• External market evidence: Flight-simulation platform information and published user research, used to cross-check the market estimates against the size and behaviour of the wider enthusiast community.

The United Kingdom provided an established-market benchmark for the opportunity modelling. Rather than apply its customer penetration unchanged to every country, the model adjusted the comparison for country economics and used country-specific customer spending to estimate revenue potential.

This separated two different sources of growth: attracting more paying customers and increasing the value of the purchases existing customers made. It also gave Bombora a way to assess the marketing investment associated with developing each opportunity.

The finding: different markets required different commercial responses

The analysis identified a positive relationship between GDP per person and paying-customer penetration. It also showed that countries with comparable economic capacity could have different levels of adoption, making a single worldwide pricing or marketing response inappropriate.

Pricing Insight translated those findings into three practical responses:

• Established, higher-purchasing-power markets: Develop offers and bundles that encourage customers to purchase more relevant content and increase their annual spend.
• Affluent but under-penetrated markets: Build awareness and trial, supported by product releases and marketing relevant to the country’s potential customers.
• Lower-purchasing-power markets: Consider more accessible pricing and lower-cost customer acquisition, so the cost of participation and the economics of reaching new users are addressed together.

The work moved beyond a blanket price increase or a blanket discount. It established a basis for aligning country pricing and offers with purchasing power, observed customer behaviour and the commercial opportunity.

The value for Bombora

Pricing Insight gave Bombora a more detailed view of where Orbx’s international growth could come from and which assumptions supported it. Country-level opportunity estimates connected market potential with customer penetration, annual spend and acquisition investment, making the analysis useful for investment decisions as well as management planning.

Follow-up correspondence in March 2019 shows Bombora using the work to prepare its investment-committee paper and seeking to reconcile the financial model with the market analysis. Pricing Insight explained the assumptions and distinguished growth from greater penetration from the additional potential of pricing, bundles and higher customer spend.

The engagement delivered an evidence-based direction for international pricing and revenue development. It turned a broad global growth ambition into a clearer set of country priorities, pricing opportunities and customer-development decisions.

Pricing Insight’s role

The Orbx engagement demonstrates Pricing Insight’s ability to support an investment firm with detailed commercial analysis of a globally distributed digital business. It brought pricing, customer economics and market opportunity together to answer the investor’s central question: where can this business grow, and what needs to change to make that growth commercially attractive?

Explore your pricing opportunities

For investors and leadership teams, an international pricing review should connect country economics with what customers actually buy. Explore our pricing strategy work for private-equity investors and portfolio companies or our pricing diagnostic service.

For related insights, read Pricing in the PE Hold Period. To discuss an international pricing or revenue review, contact Pricing Insight.