Exporting Your Goods

Setting Prices

Strategic pricing is critical to your export success. The following four questions and answers can help you determine the best pricing strategy:

What export-related costs do we need to consider?

Currency exchange rate and related bank fees
Market research costs
Promotional materials
Trade shows and exhibitions
Credit checks on potential buyers, intermediaries, and partners
Receivables and export risk insurance
Travel to the export market
International communications
Translation and interpretation
Commissions and other costs involving foreign representatives
Product and packaging modifications
Labelling, packaging, packing, marking
Logistics costs, including freight forwarders and warehousing
Documentation costs, including inspection, certification
Insurance
Customs duties and tariffs
Customs brokerage fees
Costs of financing, including interest on line of credit and currency exchange fees

What pricing strategies do we have available?

Static pricing: same price to all customers.
Flexible pricing: adjusting prices for different types of customers or locations.
Full cost-based pricing: including both fixed and variable costs.
Marginal cost pricing: including only the variable costs of production and exporting.
Penetration pricing: initial low price to attract more customers, discourage competitors, and gain quick market share.
Market skimming: pricing high to make optimum profit among high-end consumers while there is little competition.

What factors should we consider in setting prices?

The presence of direct competitors
What customers are willing to pay
The prices of other products in the market that meet the same or similar need

What difference does the supply chain make in setting prices?

You will need to include enough mark-up to cover the fees of the various channel intermediaries, which could include freight forwarders, customs brokers, shippers, foreign agents or representatives, foreign distributors, and foreign wholesalers.