Methodology

The Formula

A score of 100 means the country is exactly at the global average. Below 100 is cheaper, above 100 is more expensive.

The Basket

We track 10 reference products across 5 categories:

Calculation Process

1. Collect prices — Local prices for each product in each country's native currency.
2. Convert to USD — Multiply by the current exchange rate for a common comparison base.
3. Cap outliers — Any price more than 3× the median for that product is capped at 3× to prevent extreme distortion.
4. Compute weighted basket — Sum (price × weight) for each product. If a product is missing, weights are proportionally redistributed.
5. Calculate global average — Average of all valid country baskets.
6. Derive BPS — (Country basket / Global average) × 100.

Limitations

• Equal weighting — All products carry equal weight (10%). In reality, a Big Mac purchase is far more frequent than an iPhone purchase. Equal weights on dollar prices also allow expensive devices to dominate the score. This is a reference price comparison, not a household cost-of-living budget.
• Product standardization — While these products are globally standardized, quality, portion sizes, and availability may vary.
• Exchange rate sensitivity — Currency fluctuations can impact BPS significantly, especially for volatile currencies.
• Sample size — We currently cover 30 countries and 10 products. A broader basket and more countries would improve accuracy.

Frequently Asked Questions