Export Pricing and Costing

Export Pricing and Costing :

Export pricing should be differentiated from export costing. Price is what we offer to the customer. Cost is the price that we pay/incur for the product. Price includes our- profit margin, cost includes only expenses we have incurred.

Export pricing is the most important tool for promoting sales and facing international competition. The price has to be realistically worked out taking into consideration all export benefits and expenses. However, there is no fixed formula for successful export pricing. It will differ from exporter to exporter depending upon whether the exporter is a merchant exporter or a manufacturer exporter or exporting through a canalising agency.

You should also assess the strength of your competitor and anticipate the move of the competitor in the market. Pricing strategies will depend on various circumstantial situations. You can still be competitive with higher prices but with better delivery package or other advantages. Your prices will be determined by the followings factors.

I. Range of products offered

2. Prompt deliveries and continuity in supply

3. After-sales service in products like machine tools, consumer durables

4. Product differentiation and brand image

5. Frequency of purchase and total Annual Requmnt

6. Presumed relationship between quality and price

7. Speciality value goods and gift items

8. Credit offered

9. Preference or prejudice for products originating from a particular source

10. Aggressive marketing and sales promotion

11. Prompt acceptance and settlement of claims

12. Unique value goods and gift items

Export Costing is basically Cost Accountant's job. It consists of fixed cost and variable cost comprising various elements. It is advisable to prepare an export costing sheet for every export product.

As regards quoting the prices to the overseas buyer, the same are quoted in the internationally accepted terms.

How to Export? Index

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