Weak currency (ZAR) good or bad for local developers?
This question is probably self-explanatory but maybe I am wrong, so here goes 2 questions I would like to ask the experienced guys :)
1. Is the weak Rand good or bad for local developers that have their games on international markets like STEAM.
2. Lets say the ZAR/USD is R16. How much of that R16 will be lost when converted to ZAR and brought into your local bank account?
1. Is the weak Rand good or bad for local developers that have their games on international markets like STEAM.
2. Lets say the ZAR/USD is R16. How much of that R16 will be lost when converted to ZAR and brought into your local bank account?
Comments
2. Usually the banks buy currency from you at .20 to .30 less than the current exchange rate. I was told by an accountant that you can claim back that .20 from the tax man but I'm not sure how or even if that works. So from 16 you'd get 15.80 and then usually there is an extra fee depending on how the money comes into your account. My own personal experience has been that smaller amounts are better through paypal when it comes to fees but amounts over $1000 are better via a forex payment.
Basically: If you're only thinking short term, then getting more rands per dollar is good. If you're thinking long term then it's bad because anything you have in rands is worth less than what it used to be in dollars when you converted it.
Usually, this sort of interplay is where people make money speculating on currency markets. If you were earning over a few hundred thousand rand a year then it was worth moving to a foreign currency account and trading dollars into rands at times when the rates were high and paying out rands to dollars when the rates came down again. That's all well and good, except the rates simply don't come down often.
When events like our current massive loss of value in the rand hit, the cost of living in rand value goes up. This means that the buying power of all your savings is weaker, so your savings have lost value. If you're a games company that's been doing something like saving income to re-invest or travel or whatever, you've just lost a non-trivial percentage of your potential investment, through nothing that you did personally. It's even worse if you're planning on spending your saved income on US skills. At the moment our cost of living isn't going to change immediately, the weirdness of the current oil market fuckup is buffering the hit a little, but that just means that in 6-8 months it'll be more stark.
So, if you're looking and planning long-term, then the rand losing value like this is pretty bad news if you're building any kind of warchest: The salaries you'll offer in a year are lower in buying power, your international expenses are much larger and the amount you'll need to invest to build a game in the future has gone up. Holding rands right now is bad for you, especially if you're holding them long enough for the cost of living increases to be relevant.
Thing is, you have to convert to rands at some point for tax AFAIK. Everyone always says "Just keep stuff in $", but the reality is you need cash to pay for things and you have to abide by what the Reserve Bank says. Ideally, yes, you'd just keep a balance in USD and only draw down the amounts you immediately required, but that's only been made imperative by the last month of currency bullshit - before it wasn't worth it. At least, not for QCF.
As for you having a CFC account? Yeah, set one up, they're not difficult to get and they usually give you a better rate with most banks compared to wire transfers that get automatically converted to Rands when they're put in your account. If you're really serious, consider going with a foreign currency specialist like the ones I mention in my other CFC discussions.
Nope, I'm afraid nobody that's signed a deal with Steam can say anything about numbers. Legally. That said, remember that Steam is putting your game in front of millions of people all the time, while you're asleep. They also run the single best file-updating system on the planet. That's worth something, to be sure ;)
So I'm terrible at maths. At about how much incoming money (let's say per month, on average) does it become viable/preferable to spend that R100 a month to keep your cash in dollars in a CFC as opposed to taking converting them to Rands?
At what threshold should you go from forex layperson to forex levelled-up?
Value of a single percent of your Rands: 1200 / 40 = 30
100% of that: R3000.
Sanity check: R3000 / 11.42(old rate) = $262.50; $262.50 * 16(new rate) = R4200 (R3000 + R1200)
So, if you had $262.50 a year ago and exchanged it now, you'd break even on the account costs of keeping that money in USD. If you had more, you'd be coming out ahead. This makes it sound crazy that anyone would have dared to change any USD to Rands ever, but the point here is that this sort of 40% value change is extreme as fuck, and also that you're trying to predict these sorts of changes up front, which is not really humanly possible.
Rates fluctuated by far, far less on average, so the amounts would get larger by orders of magnitude. Plus you have bills to pay in Rands, so that means your actual returns have different weights on them... Basically, R100 a month to keep USD is a completely marginal cost that shouldn't enter into your logic for deciding things, once you're earning more than a couple thousand USD a year, that literally doesn't matter to you. The real level up point is the point at which you can afford to actually leave any money in that account that you don't need right now for things. Never speculate with money you owe.
Another question - I always have clients who want alternative payment methods to bank transfers, some bigger companies even outright say Paypal or bust. Right now I'm inclined to keep money in Paypal (I have a more personal one thatI've never drawn cash from and a company one that I was planning to draw cash from with FNB if needed), is there any advice against that? (other than don't speculate with money you owe, if you need it, draw it).
And my research tells me that using Paypal to bring money in costs basically 5% of the total, after exchange, so I should only use them for small amounts, and for bigger amounts it's much better to go the typically flat banking fees route, right?
And for Paypal the law states that after 30 days you aren't allowed to withdraw the funds, although i have no idea how this is regulated or checked. So you cannot use it as a savings account.
and Im thinking its the taxman that could come for you....I actually forgot about the no purchase with paypal thing....