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Basic Guide to Export Pricing and Quotations

Article Date: 10 February 2012

Knowing how to price your product, using the correct terms of delivery, choosing which payment method, all in an accurate and complete quotation for international buyers are critical elements of selling internationally. Pricing is probably the most problematic and if too low can create a net loss.

When considering what price should you sell your product into a foreign market the traditional elements should be taken into account, costs, market demands and competition and evaluated in line with your overall market objectives of penetration, long term growth, surplus production, out dated products or secondary market. Many firms view exporting as a secondary market and therefore have lower expectations of market share and sales volume.

There are two ways to calculate your export price. The first is to start with your domestic selling price and add on all costs (packing, shipping, agents etc) plus profit to produce a final price. The second is to strip out all costs of the product that relate to the domestic price and add all costs relating to overseas trade, for example, domestic labelling, advertising, research and development (as these would have been spent anyway for domestic production) would reduce the domestic price and additional costs may occur due to product modification, different sizes, electrical systems, etc, to place the product on the market. Most companies would take the first option, due to the fact that most of the stripped out costs, eg, advertising, would be carried out in the new market.

It is important to have a common understanding of the terms of delivery and when quoting a price you need to make it meaningful to the buyer. For example, quoting ‘Total Price to the USA’ is meaningless to a prospective buyer and they might find it difficult to determine the actual cost and therefore hesitate in placing the order. Using the correct Incoterms® 2010 rules and stating the place of either despatch or delivery will provide the buyer with the exact location, which costs are included and any additional costs that will incur.    

As a guide to producing the all important price to a buyer in an overseas market, the Basic Guide to Export Pricing and Quotations details factors you need to consider.

The Chamber’s International Trade Training courses and experienced advisors cover all aspects of exporting and importing; locating your target market, getting your price right, ensuring you get paid, and despatching your goods.

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