Started digging into this after our team standup where three people said they couldn't afford Cursor. The math is completely broken.
My Cursor subscription costs €22.80/month because of German VAT bullshit. That's maybe an hour of work for me. But our contractor in Romania? Same €22.80 costs him like 3-4 hours of work. Our intern from Bangalore would spend her entire daily wage on it.
Here's the brutal numbers I dug up using Stack Overflow's 2024 developer survey data and OECD purchasing power data:
SF developer making $150k: Cursor costs 8 minutes of work
Me in Berlin making €70k: About 45 minutes
Developer in Warsaw making $30k: 2.5 hours
Developer in Bangalore making $15k: 6+ hours of work every month
Found this forum thread where a guy calculated that $20/month is actual rent money for developers in most countries.
The pricing disparity becomes even more apparent when you look at OpenAI's global user base versus their flat pricing model. Meanwhile I drop more than that at Starbucks without thinking.
The currency fuckery is even worse. Brexit nuked the pound and UK developers suddenly paid 15% more for identical AI completions. No email, no heads up, just "lol your subscription costs more now because forex." My British colleague Dave started getting PAYMENT_DECLINED errors in March 2025 because his card issuer flagged the sudden price jump as potential fraud. Took him two hours on the phone with Barclays to unblock it.
VAT Bullshit Makes Everything Worse
The pricing is already broken, then EU customers get surprise-fucked by VAT they hide until checkout.
Claude Pro advertised $20/month. My N26 statement: €22.40. Turns out German VAT is 19% extra they "forgot" to mention upfront. So I'm already eating shit compared to Americans because German salaries are lower, then paying another 19% because tax bullshit.
Every EU country gets screwed differently: UK pays 20% extra VAT, Denmark gets hit with 25%, Germany adds 19% (me).
The VAT rate differences across Europe create massive pricing inconsistencies that nobody talks about.
Plus currency fluctuations randomly change your effective price. The pound dropped after Brexit and UK developers just started paying more. No notification, no extra features, just "your AI tools now cost 15% more because exchange rates."
Learned this the hard way when our London office's Cursor subscriptions got suspended in bulk because their accounting software couldn't handle the fluctuating charges. Error message: BILLING_AMOUNT_MISMATCH. Turns out their auto-payment system was configured for exactly £16.80, but the actual charge was £17.24 that month due to exchange rate drift. Took three days to sort out because Cursor support is in California and kept suggesting we "just update our payment settings" without understanding that UK corporate cards don't work that way.
Same thing happened when the euro weakened against the dollar last year. European developers got a silent price increase while Americans paid the same amount. Our Romanian contractor's bank rejected three Cursor payments in a row because the charges kept fluctuating between €18.40 and €19.20. Error code DECLINED_AMOUNT_VARIANCE - apparently Romanian banking regulations flag subscriptions with >2% price variance as potentially fraudulent. Took a week of emails with both his bank and Cursor support to whitelist the merchant.
Students Get Completely Fucked
The people who need these tools most can't afford them.
A CS student at IIT Bombay making ₹12k/month (~$150) internship money can't blow ₹1600 ($20) on Cursor. That's 13% of their income for a dev tool. Stanford CS kids making $7k/month internships don't even notice the charge.
Saw this shit firsthand with our last intern batch. The SF and NYC kids showed up already fluent in AI workflows - they could afford to fuck around with these tools all through college. The equally brilliant kids from Chennai and Prague? Six months behind on AI tooling because they got priced out of even learning it.
The Prague kid, Pavel, was actually better at algorithms than anyone else but had never used AI assistance. First week he's manually writing boilerplate React components while the Stanford intern is generating full page layouts with Cursor. Not because he's less capable - because $20/month was rent money for him as a student and his parents couldn't justify it. Took us three months to get him caught up on AI workflows, and he's still pissed about losing that time.
Our startup is kind of fucked too. We raised $300k and burn $200/month on AI tools for 5 developers.
Microsoft's Azure pricing calculator shows how regional pricing should work in practice. That's fine now but when we were bootstrapping? $40/month per developer was actually expensive. Had to choose between Cursor licenses and our third server instance on DigitalOcean. Guess which one actually keeps the lights on?
YC startups with $2M rounds don't even think about it. They just expense everything and move on. But when you're burning through a $50k pre-seed round, every subscription matters. I spent an entire weekend in February migrating everyone to Continue.dev with local Code Llama just to save $200/month. Productivity dropped maybe 20% but we stayed alive three extra months.
Nobody Gives a Shit About Fixing This
Only JetBrains seems to get it. Their student licenses work globally, not just for Stanford and MIT.
JetBrains' regional pricing strategy demonstrates that developer tools can be both profitable and accessible globally. Plus their AI Assistant costs less in emerging markets because they're not idiots.
GitHub has student packs with free Copilot but try proving you're a student at some university in Bangladesh. Good luck with that verification process. Also it expires when you graduate, exactly when you need it most for job interviews.
GitHub's student verification process heavily favors Western institutions with established digital verification systems.
Microsoft is the most frustrating. They do regional pricing for everything else: Office 365 is way cheaper in India, Azure pricing has regional variations, Xbox Game Pass costs less in emerging markets, even fucking Windows licenses cost less in poor countries.
This Microsoft regional pricing strategy works across all their products except AI tools.
But Copilot? Nope, flat $10/month whether you make $150k or $8k. Same company, completely different pricing philosophy.
Cursor's response to pricing complaints was essentially "API costs are too high, tough shit". Pure bullshit. Netflix pays per-stream licensing and still nails regional pricing. They just don't want to earn less from rich markets.
The "API Costs" Excuse is Bullshit
Every AI company hides behind "we pay API costs per request" when asked about regional pricing.
Netflix pays licensing fees per stream and still charges $3/month in India vs $15 in the US. Spotify pays per play and does regional pricing. Adobe Creative Cloud pays cloud costs and offers cheaper pricing in emerging markets.
The real math: OpenAI API pricing runs $0.10-0.30 per 1000 tokens. A typical Copilot completion uses maybe 50-200 tokens, costing $0.005-0.06 per completion. Even heavy users cost under $2/month in API fees.
The actual cost structure shows API costs are minimal compared to subscription fees.
The other $8-18 of your subscription is profit margin, which doesn't depend on your location. They just want to maximize revenue from rich markets instead of growing their user base globally.
This Creates a Two-Tier Developer World
The pricing disparity is creating a fucked up two-tier system.
Developers with AI experience (expensive, usually from rich countries) vs developers without (cheaper, but less productive because they can't afford the tools). Companies hiring globally end up with teams where half the developers have AI assistance and half don't.
Our remote team is a perfect example. The US and EU developers use Cursor, Copilot, and Claude Pro. The developers from cheaper countries use free alternatives or nothing. Same companies, same codebases, completely different productivity levels.
This bit us hard during a production incident in August 2025. Our main API started throwing ECONNRESET errors under load and we needed to debug fast.
The debugging experience gap between AI-assisted and manual debugging is massive during high-pressure incidents. The Berlin and NYC developers spun up AI-assisted root cause analysis in minutes - Cursor helped them trace through 10,000 lines of connection pooling code while Claude generated test scenarios. The Bangalore developer was manually grepping through logs because he couldn't afford AI assistance. Incident took 4 hours to resolve instead of 30 minutes, cost us $50k in lost revenue, all because we couldn't justify $240/year for global tool access.
Plus talented developers are starting to migrate just to access better tools. Brain drain accelerated by subscription pricing.
What Should Actually Happen
It's not rocket science. Other software companies figured this out years ago.
Just copy Spotify: $1.99/month in India, $9.99 in the US, same service. They make more money from 10x Indian users at $2 than from 1x US users at $10.
Spotify's regional pricing model proves you can maintain quality while adjusting for local purchasing power.
Real student pricing - not just for MIT and Stanford. If you're a student anywhere, you should get free or cheap access. Period.
Give early-stage companies in emerging markets free credits that scale with their funding rounds.
Stop hiding VAT. Just show the real price including taxes upfront.
The tech exists. Netflix, Spotify, Adobe, Microsoft, Steam, and basically every other software company does regional pricing. AI companies are just choosing not to because they'd rather extract maximum money from rich markets than grow their user base globally.
The established patterns for global software pricing show clear paths for AI companies to follow - they just choose not to.
These tools could actually democratize coding. Instead they're creating the biggest barrier to entry in programming history. And the companies with power to fix it are choosing not to.
The gap between AI-assisted and manual coding is creating a new digital divide in software development.
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