Pricing your product or service for International Success
One of the challenges any company faces when looking to sell global is trying to set prices and the terms of sale for their products and services
in foreign markets.
There are many costs incurred in selling overseas and before setting any pricing strategy you need to ensure that all costings and all risk management
costs and strategies have been factored into your pricing strategy.
Factors that can immediately impact on your international pricing strategy and terms of sale and ultimately your profit margin include:
- currency exchange rates
- economic conditions
- production expenses
- your competitors and the consumers in your target market
- export transaction costs
- risk management expenses
- managing your freight costs
Before you enter any new market you need to ensure that your price is competitive with what is on offer in the market, but you will also need to factor in the cost of marketing and managing your export transaction and risk management strategies.
Getting your international pricing strategy right is crucial to the success of your business. It is difficult to go back and renegotiate your price
once this has been set and also you ultimately cannot risk potentially not getting paid.
Key Considerations
Incoterms® 2010: avoid costly misunderstandings by clearly defining the responsibilities of sellers and buyers for the delivery of goods. ICC’s Incoterms® rules are regularly incorporated into sales contracts worldwide. This module is a basic introduction to understand why Incoterms are vital to understanding your risk but also your responsibilities and potential liability.
Pricing for international markets: an in-depth module that will guide you through the requirements for costing for international
markets. Companies will be taken through a template costing guide and will have the opportunity to workshop through applying the basic rules
for export costing.
Risk management: this module will take you through all of the risks specifically associated with export documentation, transport
and insurance. It is important that companies understand how they can manage their risk upfront and understand the added costs of export so
that they can set their international pricing strategy accordingly.
Managing your foreign exchange risk: understand the basic mechanisms of managing manage your foreign exchange risk.
International sales contracts: international contract for the sale of goods and services can be complex. This module is an introduction
only and will take companies through key considerations to look out for in any international sales contract, including:
- General characteristics of the contract
- Scope of application
- Termination of the contract
- Dispute resolution
- Jurisdiction and role of law
The ECA runs a one day workshop on pricing for international success.
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Leandra Coffey, Director, Fruity Sacks
Member
of the ECA
“Our business is about making it easy for people to make environmentally friendly choices. We are looking to expand into new overseas markets and the ECA have been a huge help in this endeavour. The ECA have given us introductions to key businesses that can help us in the markets we are looking at, and their workshops and seminars on topics relevant to exporting were extremely useful. All up, our association with the ECA has been a great asset to Fruity Sacks.”
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Featured Member
Homart Group has been established for 27 years, and specialises in manufacturing and marketing high quality Australian health supplements. Their products include two major segments of health supplements; skin care and dairy products. Their biggest export challenge is the regulations each country has for the import permits. It normally takes long time to get the registration approval before they can sell the goods into that country.