November 13, 2008

Pound continues to fall

by Brian Turner

According to the BBC, the value of the pound continues to fall against the dollar.

Which is good news for those earning in USD, but not so good when outsourcing in USD:

The pound has continued to fall against the dollar, hitting its lowest rate in six years against the US currency on fears of a deep recession.

It follows comments from the Bank of England on Wednesday that the UK economy had worsened and that it would cut interest rates again if necessary.

A couple of pointers:

- the pound is at it’s lowest lowel against the USD since 2002
- GBP to USD has fallen from £1=$2 in July to £1=$1.48
- GBP to euro is now £1=83.81 euro

The BBC report also highlights that compared to other currencies, the GBP is at its weakest since 1996.

So how does this affect webmasters, publishers, affiliates, and outsource services?

Well, if you’re earning from Adsense and US affiliate programs, the value of your payments is now more than 25% higher than four months ago simply due to the exchange rate.

If you were earning $10,000 per month from Adsense, those earnings are now worth an extra £1750 per month.

Conversely, if you pay for US hosting, whether shared or dedicated, or else outsource writers, designers, or programmers from overseas and pay in USD, then your costs are now 25% higher.

So that $400/month dedicated server you have in the US that seemed cheap at £200/month, is now pushing over £300/month in costs.

As someone who has more incoming than outgoing in USD, it ironically means that during this financial crisis, my business is earning more.

However, whatever the case, this could certainly be a good time to review your costs, and compare overseas to home costs to see whether it would make better sense to utilise UK companies and services to help keep costs in order.

Questions? Discuss this in our Internet Business forums for help and advice

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