What is Smoothing?
The smoothing parameter is a value between 0 and 1 that controls how aggressively the PPP discount is applied. It acts as a normalization factor to prevent prices from being unrealistically low in countries with very low Price Level Ratios.
The Problem with Raw PPP
Without smoothing, raw PPP calculations can produce prices that are too low to be sustainable:
import ppp from '@sachithrrra/ppp';
// Nigeria has a Price Level Ratio of 0.119
const basePrice = 100;
// Raw PPP (no smoothing)
console.log(ppp(basePrice, 'NG', 0)); // $11.93 (88% discount!)
// With default smoothing (0.2)
console.log(ppp(basePrice, 'NG', 0.2)); // $29.97 (70% discount)
// No discount (smoothing = 1)
console.log(ppp(basePrice, 'NG', 1)); // $100 (0% discount)
While raw PPP prices (smoothing = 0) are theoretically “fair,” they may not cover your costs or reflect the value of your product. Use smoothing to find a balance between affordability and sustainability.
How Smoothing Works
The smoothing formula adjusts the Price Level Ratio toward 1 (no discount):
adjustedFactor = factor + (1 - factor) * smoothing
factor: The raw Price Level Ratio (e.g., 0.289 for Sri Lanka)(1 - factor): The “discount gap” (e.g., 1 - 0.289 = 0.711)smoothing: How much of the gap to close (0 = none, 1 = all)adjustedFactor: The final multiplier applied to the original price
Visual Example: Sri Lanka (factor = 0.289)
import ppp from '@sachithrrra/ppp';
const factor = ppp.factor('LK'); // 0.28885598326474304
// Smoothing = 0 (Raw PPP)
adjustedFactor = 0.289 + (1 - 0.289) * 0;
// adjustedFactor = 0.289 + 0 = 0.289
// Smoothing = 0.2 (Default)
adjustedFactor = 0.289 + (1 - 0.289) * 0.2;
// adjustedFactor = 0.289 + 0.142 = 0.431
// Smoothing = 0.5 (Moderate)
adjustedFactor = 0.289 + (1 - 0.289) * 0.5;
// adjustedFactor = 0.289 + 0.356 = 0.645
// Smoothing = 1 (No discount)
adjustedFactor = 0.289 + (1 - 0.289) * 1;
// adjustedFactor = 0.289 + 0.711 = 1.0
Smoothing Values Explained
0.0 - Raw PPP (Maximum Discount)
Applies the theoretical PPP price with no adjustments. This gives the maximum possible discount based purely on purchasing power.
import ppp from '@sachithrrra/ppp';
const price = 50;
console.log(ppp(price, 'IN', 0)); // $12.07 (India)
console.log(ppp(price, 'EG', 0)); // $8.74 (Egypt)
console.log(ppp(price, 'NG', 0)); // $5.97 (Nigeria)
Use case: Academic research, theoretical pricing models, or when you want to offer the absolute lowest possible prices.
0.2 - Balanced Discount (Default)
The recommended default that provides meaningful discounts while maintaining business sustainability. This closes 20% of the discount gap.
import ppp from '@sachithrrra/ppp';
const price = 50;
console.log(ppp(price, 'IN', 0.2)); // $19.66 (India)
console.log(ppp(price, 'EG', 0.2)); // $14.99 (Egypt)
console.log(ppp(price, 'NG', 0.2)); // $14.99 (Nigeria)
Use case: SaaS subscriptions, digital products, online courses - where you want to expand global reach while maintaining profitability.
0.5 - Conservative Discount
Provides moderate discounts that are closer to the original price. This closes 50% of the discount gap.
import ppp from '@sachithrrra/ppp';
const price = 50;
console.log(ppp(price, 'IN', 0.5)); // $31.00 (India)
console.log(ppp(price, 'EG', 0.5)); // $24.87 (Egypt)
console.log(ppp(price, 'NG', 0.5)); // $27.52 (Nigeria)
Use case: Premium products, enterprise software, or when you need to maintain higher margins.
1.0 - No Discount
Completely disables PPP adjustments and returns the original price for all countries.
import ppp from '@sachithrrra/ppp';
const price = 50;
console.log(ppp(price, 'IN', 1)); // $50 (India)
console.log(ppp(price, 'EG', 1)); // $50 (Egypt)
console.log(ppp(price, 'NG', 1)); // $50 (Nigeria)
console.log(ppp(price, 'US', 1)); // $50 (United States)
Use case: When you need to disable PPP pricing temporarily or for specific scenarios without changing your code logic.
Comprehensive Comparison
Here’s how different smoothing values affect pricing for a $100 product across various countries:
import ppp from '@sachithrrra/ppp';
const basePrice = 100;
function compareSmoothingValues(countryCode, countryName) {
console.log(`\n${countryName} (${countryCode}):`);
console.log(` Raw PPP (0.0): $${ppp(basePrice, countryCode, 0).toFixed(2)}`);
console.log(` Balanced (0.2): $${ppp(basePrice, countryCode, 0.2).toFixed(2)}`);
console.log(` Conservative (0.5): $${ppp(basePrice, countryCode, 0.5).toFixed(2)}`);
console.log(` No discount (1.0): $${ppp(basePrice, countryCode, 1).toFixed(2)}`);
}
compareSmoothingValues('NG', 'Nigeria');
// Nigeria (NG):
// Raw PPP (0.0): $11.93
// Balanced (0.2): $29.97
// Conservative (0.5): $55.47
// No discount (1.0): $100.00
compareSmoothingValues('IN', 'India');
// India (IN):
// Raw PPP (0.0): $24.15
// Balanced (0.2): $39.32
// Conservative (0.5): $62.07
// No discount (1.0): $100.00
compareSmoothingValues('BR', 'Brazil');
// Brazil (BR):
// Raw PPP (0.0): $46.16
// Balanced (0.2): $56.93
// Conservative (0.5): $73.08
// No discount (1.0): $100.00
compareSmoothingValues('PL', 'Poland');
// Poland (PL):
// Raw PPP (0.0): $48.97
// Balanced (0.2): $59.18
// Conservative (0.5): $74.49
// No discount (1.0): $100.00
Choosing the Right Smoothing Value
For SaaS Products
// Monthly subscription: $29
import ppp from '@sachithrrra/ppp';
const subscription = 29;
// Use 0.2 (balanced) for most markets
const priceIN = ppp(subscription, 'IN', 0.2, 'pretty'); // $11.99
const priceBR = ppp(subscription, 'BR', 0.2, 'pretty'); // $16.99
Recommended: 0.2 - Provides meaningful discounts that increase conversion while maintaining sustainable revenue.
For Digital Products (Ebooks, Courses)
// Online course: $199
import ppp from '@sachithrrra/ppp';
const course = 199;
// Use 0.3-0.4 for digital products with lower marginal costs
const priceIN = ppp(course, 'IN', 0.3, 'pretty'); // $89
const priceBR = ppp(course, 'BR', 0.3, 'pretty'); // $119
Recommended: 0.2-0.4 - Digital products have near-zero marginal costs, so you can afford to be more aggressive with discounts.
For Premium/Enterprise Products
// Enterprise license: $999
import ppp from '@sachithrrra/ppp';
const enterprise = 999;
// Use 0.5 or higher to maintain premium positioning
const priceIN = ppp(enterprise, 'IN', 0.5, 'pretty'); // $620
const priceBR = ppp(enterprise, 'BR', 0.5, 'pretty'); // $730
Recommended: 0.5-0.7 - Premium products need to maintain their positioning. Too aggressive discounts may devalue the brand.
Dynamic Smoothing Strategy
You can adjust smoothing based on the country’s Price Level Ratio:
import ppp from '@sachithrrra/ppp';
function getDynamicSmoothing(countryCode) {
const factor = ppp.factor(countryCode);
if (factor === null) return 0.2; // Default for unknown countries
if (factor < 0.3) return 0.15; // Very low PPP - more aggressive
if (factor < 0.5) return 0.2; // Low PPP - balanced
if (factor < 0.8) return 0.3; // Medium PPP - conservative
return 0.5; // High PPP - minimal discount
}
const basePrice = 100;
// Nigeria (factor: 0.119) - Gets 0.15 smoothing
console.log(ppp(basePrice, 'NG', getDynamicSmoothing('NG'))); // $28.06
// India (factor: 0.241) - Gets 0.2 smoothing
console.log(ppp(basePrice, 'IN', getDynamicSmoothing('IN'))); // $39.32
// United Kingdom (factor: 0.849) - Gets 0.5 smoothing
console.log(ppp(basePrice, 'GB', getDynamicSmoothing('GB'))); // $92.44
Implementation in index.js
The smoothing calculation is implemented in the core PPP function at index.js:50:
// Apply smoothing
const adjustedFactor = factor + (1 - factor) * smoothing;
let finalPrice = originalPrice * adjustedFactor;
if (typeof smoothing !== 'number' || smoothing < 0 || smoothing > 1) {
throw new Error('Smoothing must be a number between 0 and 1.');
}