In the first half of 2022, the peso-dollar exchange rate moved significantly. For a studio that invoices some clients in dollars, this created a situation that required an honest rethinking of how we price.
Here is what we did and why.
The Problem With Peso-Denominated Quotes for Dollar Clients
We had been quoting international clients in US dollars since early 2021. The quotes were based on a peso cost model converted at a rate we estimated at the start of the year. When the dollar strengthened against the peso through Q2 and Q3 2022, the situation reversed: dollar revenue that had felt appropriately priced at the start of the year was now producing more pesos than we had budgeted for, but the underlying cost base - local talent, software subscriptions, office costs - was going up in peso terms due to inflation.
The effect was not catastrophic, but it exposed a structural fragility in how we had been thinking about pricing. We were treating the exchange rate as fixed when it was not.
We also had local clients paying in pesos. The peso cost pressures were hitting them harder and they had less buffer. Managing the two pricing contexts simultaneously required clarity about what was actually driving our costs.
What We Changed
We made three changes.
First, we moved to USD-denominated project costs for all international clients, priced at rates that reflect the work's actual market value in the international context - not a peso rate with a currency conversion applied. This is a meaningful philosophical shift. We were not offering international clients a discount because our costs are in pesos. We were offering them the quality and reliability of a professional studio, priced accordingly.
This is a harder sell initially. Some international clients have specific expectations about what Philippines-based studios cost. Our position: the expectation is often calibrated against lower-quality alternatives, and the comparison breaks down when you actually compare outputs and communication standards. We have had that conversation directly and it has worked. Clients who value what we do have accepted the pricing. Clients who are primarily optimizing for the cheapest dollar rate are not our clients.
Second, we added a currency clause to our contracts for multi-month engagements with milestone billing. For projects where invoices are spread over six months or more, the peso equivalent of the dollar amount is calculated at the rate at time of invoice, not at a rate fixed at project start. This protects both sides against large swings.
Third, for peso-paying local clients on larger projects, we moved to a cost-plus pricing model with an explicit acknowledgment that input costs - particularly software subscriptions denominated in dollars - are subject to change. We have not raised quotes mid-project. But the conversation about cost structure is explicit at the scoping stage.
What We Did Not Do
We did not cut corners on the work to protect margin. The pressures were real but the work quality cannot be the variable.
We did not surprise clients with mid-project price changes. Every change in our approach happened at the start of new engagements, with clear explanations. Existing engagements honored their original terms.
We also did not pretend the situation was not happening. When clients asked about pricing decisions, we explained the reasoning. Transparency about business context builds trust. Opacity about it erodes trust, especially when clients can see the exchange rate headlines themselves.
What This Established
The process of rethinking pricing under pressure forced us to be more precise about our actual cost model than we had been before. We now have a clearer view of what each type of project costs us to deliver, what margin we need, and what the right price is in different billing currencies.
That clarity is useful independent of exchange rate volatility. Pricing that is grounded in actual costs is more defensible and more consistent than pricing that is arrived at by gut feel or competitive comparison.
Every project is scoped individually. If you are an international client evaluating a build with us, we are happy to talk through how our pricing works and what it reflects.