The purpose of this thread is to try and understand the differences between the two and why are there advocates in favour or against. Naturally, the timing of this thread has to do with the withdrawal of several titles from GOG as a result of the changes implemented.

The idea of "flat pricing," as I understand it, has to do with paying one price for the same game across the world, with that price being the U.S. one. That way, a person in Japan will pay the same as one in the U.S. or in the UK or in Brazil for, say, Sid Meier's Alpha Centauri: $5.99.

At present, GOG has also introduced a service whereby people can buy a game in the currency of their country (Amazon has a similar service) using current currency conversion rates. Therefore, a game that today costs $5.99 can also be bought for 4.54 Euro, 3.61 Britsh Pounds, 6.40 Australian Dollars, or 219 Russian Roubles.

So far so good, right? There are many points of contention, however. The first being an obvious reality of the gaming world today: games don't cost the same in different countries. An example I used recently, "Age of Wonders III," has different price points according to the region. Steam sells AoW3 at 39.99 Australian Dollars, 39.99 USD, 29.99 GBP, 39.99 Euro (for both Tier 1 and 2), and 599 Russian Roubles. At current rates and in USD, AoW3 then costs 37.43 in Australia, 49.75 in the UK, 52.66 in Europe, and 16.33 in Russia. AoW3 is also regionally-priced on GOG but I haven't been able to find its different price points beyond my own where it's at 31.59 USD (what doesn't match with any of Steam's regions).

In a letter dated February 25th (www.gog.com/news/letter_from_the_md_about_regional_pricing), the Managing Director of GOG.com, Guillaume Rambourg, apparently tried to explain regional pricing or rather, why it was necessary for certain titles. Unfortunately, the letter doesn't explain what the different regions and prices available are. It does, however, bring up the issue of customers in Western Europe, UK, and Australia "being screwed with regional pricing," something I find interesting in light of the following.

First, I have no idea how publishers/retailers define regions. Steam, at least, divides the known world into the U.S., Europe, Russia, and Australia, and tries to fit every country into one of those groups. I don't know whether GOG did something similar before dropping regional pricing. Furthermore, I don't know how prices are determined but Russia often has the lowest prices of all the regions. Why is this?

On a different site, a person made the case that flat pricing was unfair because it didn't take into account the differences in average wage levels, living standards, tax rates, etc. I agree. $5.99 don't have the same impact on a person's salary in the U.S. as they do in Russia. According to the International Labour Organization (http://en.wikipedia.org/wiki/List_of_countries_by_average_wage), the monthly average wage in 2009 PPP dollars for the U.S. was $3,263 whereas in Russia it was $1,215. For further reference, the values for the UK and Australia were $3,065 and $2,610 respectively. Latin American countries fared worse, with the highest value being that of Argentina with $1,108 and the lowest one being that of Mexico with $609. This is not to mention countries like Tajikistan with a monthly average wage of $227. In light of this, I have to wonder which countries are really being screwed with regional pricing or even flat pricing at that.

Does regional pricing perhaps take these factors into account? It is possible but if so, how? What's the magical formula? How come countries with average wage levels lower than Russia's end up paying the same price as the U.S.? I don't know any of this. Does anyone?

Not the result of regional pricing. Now to read the rest of the post.

Thanks for the link! It's really difficult to understand what's going on. :S

Two additional comments.
1) Make the case for flat price using beers as the currency. So a game costs 2 beers, 3 beers or 4 beers. Then see what the $US equivalent are, and consider which case is the fair one.
2) Steam has multiple regions. The pricing regions are US, UK, EU1, EU2, Germany, Russia, Japan, Brazil, Australia, Mexico and Ukraine (data from steamprices). And they can also control availability (and potentially price) on a per country basis.

Looks like the site I checked was missing a few regions then. How does Steam assign countries each region?

No idea. And quite a few of them do raise that question. Poland (I think) for example is in EU2 instead of Russia, even though the wages are closer to Russia than Europe. The German zone also seems to be a recent addition, since Germany usually had the EU1 zone, with additional censorship checks.

Is there a way to check my current region on Steam?

Checking the price of a few games on steamprices is how I'd do it. And it's quite possible that steamprices will redirect you to the correct region as well.

Yes. No, I don't think so. They don't seem to be using current conversion rates but rather a fixed price that is fairly close to the rates but rounded.

I can confirm that Poland is EU2.
Most publishers still give us crappy EU1 deals, but some games are cheaper.

Interesting. I'd like to know how those rates are determined and how often they're updated.

Just want to point out that Steam does not sell anything in AUD, it's all USD.

You're right, I got the two confused.