How to adapt your product and unit economics to a new market without losing margins

When entering a new market, companies often face a dilemma: the product has to be adapted to local consumers, but the additional costs can reduce the profitability of the business.

To avoid this, it is important to understand which elements of the product really need to change and which can stay the same.

Step one: study local needs.

A product that sells well in one country will not necessarily be in demand in another. Buying habits, functionality requirements, income levels and willingness to pay may differ.

Insight Partners' guide to scaling SaaS companies internationally stresses that when entering a new country you need to re-check Product-Market Fit: who the buyer is, what problem they are solving and which features are really needed.

Step two: adapt the product without excessive costs.

You don't have to create a separate version of the product for each country. It is better to identify the mandatory local changes and keep the core technology, production processes and key advantages.

McKinsey gives a telling example: an international consumer goods manufacturer was losing to a local competitor in Asia on price. Instead of simply cutting the price, it redesigned the product formulation, the packaging and the dispenser. As a result, production costs fell and profitability rose by 40%.

Step three: recalculate your unit economics.

You need to recalculate revenue and costs per unit of product or per customer.

Take into account not only production but also international logistics, customs payments, local marketing, payment system fees, customer service and the cost of acquiring a customer.

Then determine your margins and the customer acquisition payback period. If the economics don't add up, you need to revisit the price, sales channels, product configuration or service model.

Step four: test the new model before scaling.

In its pricing materials, Andreessen Horowitz recommends testing customers' willingness to pay, segmenting the audience and choosing a suitable payment model. For example, in one market customers may prefer a subscription, and in another, paying for actual usage.

Launch a pilot version of the product, check real sales and costs, and increase investment only after positive economics are confirmed.

The key principle: adapt what affects demand and competitiveness, but keep what provides your economic advantage. Revenue growth in a new market should not come at the cost of destroying the business's margins.

Sources:

1. McKinsey — Developing Winning Products for Emerging Markets. A real business case: redesigning the product and packaging improved margins by 40%. Read the study.
2. Harvard Business School — Retail Expansion to International Markets: Why Some Retailers Succeed and Many Fail (2026). A study of the balance between local adaptation and preserving the business's economic advantages. Read the study.
3. Andreessen Horowitz — Why Pricing and Packaging Matters More When You're Launching Your Second Product (2024). Customer segmentation, willingness to pay and choosing a monetization model. Read the article.
4. Insight Partners — Building Locally, Scaling Globally. A practical guide to adapting the product, pricing and business model during international expansion. Read the guide.