When You Set a Price Once and Collect It for Three Years

Most currency risk is transactional. An invoice, a payment, a date.

Subscription businesses have a different shape of problem. You set a price, publish it, and then collect it monthly or annually for as long as the customer stays — which might be five years. The exchange rate at which you set that price becomes embedded in your revenue for the entire lifetime of the contract.

That's not a transaction exposure. It's a pricing architecture issue that happens to be denominated in currency.

The three decisions that create it

1. The price list. You publish $49/month and €45/month alongside your £39/month. Those numbers were set using a rate on a particular day, and unless you reprice, they stay.

If sterling strengthens 10% against the euro, your European revenue is worth 10% less in reporting currency — on every customer, every month, until someone changes the price list. Your churn didn't move. Your pricing didn't move. Your revenue did.

2. The billing currency. If you bill everyone in sterling, international customers absorb the currency risk and the friction. Some will accept it. Others compare you unfavourably against a local competitor whose pricing doesn't fluctuate, or get procurement pushback on paying a foreign currency invoice.

3. The multi-year contract. Annual or multi-year deals at a fixed foreign currency price are longer-dated exposures than most importers carry, and they're frequently signed without anyone looking at a rate.

Why SaaS feels this more acutely

Three reasons the mechanics bite harder here than in most sectors.

Prices are sticky. Repricing a subscription base is a commercial event, not an admin task. It requires notice, risks churn, and sits with a product or revenue team who weigh currency as a minor factor against several larger ones. An importer reprices every season. A SaaS business might reprice every two years.

Revenue is recognised over time. A currency move affects revenue recognition across every subsequent period, which means it shows up in reported ARR and growth rates, not just in a single month's cash.

Growth metrics are currency-sensitive. If you report ARR to a board or investors, currency movement distorts the growth rate. A business growing 30% in local currencies might report 22% after an adverse move — and spend the next board meeting explaining that the underlying business performed as planned.

What to actually do

Decide your FX policy on pricing, explicitly.

Three defensible positions:

• Local pricing, reviewed annually. Set prices in each currency using a conservative rate, hold them for twelve months, and review on a fixed cycle. Predictable for customers, manageable for you, and the currency risk is bounded by the review period.

• Local pricing with hedging. Set prices locally and hedge the forecast revenue so the sterling value is protected. Better margin certainty, more administrative work, and it needs a forecast you trust.

• Sterling-only pricing. Removes the exposure entirely and transfers it to your customers. Legitimate for a product with no local competition; costly in competitive markets.

What isn't defensible is publishing foreign currency prices off a spot rate, never revisiting them, and treating the resulting margin variance as something that happened to you.

Hedge the contracted portion. Signed annual and multi-year contracts in foreign currency are committed revenue with known amounts and known dates. That's the clearest case for forward contracts in the whole business, and it's usually the part nobody has hedged.

Hold what you collect. If you have euro revenue and euro costs — a European sales hire, EU-hosted infrastructure, euro-denominated ad spend, EU VAT on digital services — pay them from euro receipts rather than converting both ways.

Report currency-adjusted growth. Show the board both numbers: reported growth and constant-currency growth. It costs one extra line and it separates business performance from market movement, which is what the board actually wants to know.

The payments side

Two practical points that matter more as you scale.

Local payment methods lift conversion. Card-only checkout works in some markets and poorly in others. SEPA direct debit in Europe, ACH in the US, and local bank transfer options materially affect both conversion and churn in enterprise segments where finance teams don't want to pay by card.

Payment processors convert at their rates. If your processor settles everything to sterling automatically, you're paying their spread on all international revenue, at their timing. Receiving into currency accounts and converting on your own terms is usually cheaper and always more controllable.

The question to answer

Open your price list. For each non-sterling price, ask:

What exchange rate was this number set at, when, and by whom?

If nobody can answer, your international pricing is a historical artefact rather than a decision — and it's quietly determining margin on a growing share of your revenue.

William Fuller, Co-Founder of Orbis Exchange Group contact on 0203 918 5622

Ben James, Co-Founder of Orbis Exchange Group contact on 0203 918 5621