{slider How to price your product for export}

The pricing process for the products to be exported is particularly important, since it takes into account, in addition to production cost factors, other factors related to the transportation and delivery of goods to foreign markets.

These factors may be:

  • Differences in currency rates
  • Goods transportation
  • Special packaging of exported products
  • Goods insurance
  • Commissions and other charges regarding intermediaries, etc.

The demand for a product, the same as in local markets, has a decisive impact on prices. For most consumer goods, the per capita income is an index of market dynamics, while few products are considered to have such a high demand, so as not to be affected by the low consumers’ per capita income.

Competition, the same as in local markets, definitely affects the sale prices for products. A new product in a new market may have a high price, while the introduction of a product in a particularly competitive market, can require a reduced price in order to win a market share immediately.

However, pricing also takes into account the export targets in each market. Such targets can be the quick spreading into the market, the replacement of existing products, the slow but steady penetration, etc. These targets and the overall pricing strategy are also affected by the development phase of the target market and the potential consumers’ per capita income.

Some alternative pricing methods are as follows:

  • Static pricing – the same price for all customers.
  • Flexible pricing – adjusting prices for various customer types.
  • Pricing based on cost – pricing aiming at fully covering the constant and variable costs of product manufacturing and export.
  • Pricing based on variable cost – pricing aiming at fully covering the variable costs of product manufacturing and export, while the stable costs are covered by sales in the domestic market.
  • Pricing for penetration – low price, for a quick introduction in the market and in order to discourage competitors.
  • Pricing for markets with low competition – high product price, with a high profit margin in markets with low competition.

After defining the pricing strategy and calculating the various costs, the products are also priced based on the desirable profit margin for the company.

While attempting to price its products in the most effective way, the company must take into account all potential costs.

Most of these are listed below:

  • Marketing and promotion costs: distribution, advertising, trips, printed promotional material, participation in trade fairs, etc.
  • Production costs: production cost per product, packaging or assembly cost per product
  • Packaging cost: materials, mock-up, label, etc.
  • Organization and administration costs: safety of transportation, certifications, etc.
  • Goods transport costs: storage, insurance, transport costs
  • Financial costs: costs of funding exports, costs from fluctuations in currency rates, costs from fluctuations in interest rates, etc.