How do you pick the right export price for your products?

1 Step 1: Analyze your market

Before you decide on your export price, you need to research your target market and understand the demand, competition, and regulations that affect your product. You can use various sources of information, such as trade publications, market reports, trade shows, and online platforms, to gather data on your potential customers, competitors, and distributors. You should also consider the cultural, political, and economic factors that influence your market's preferences, expectations, and purchasing power.

2 Step 2: Calculate your costs

The next step is to calculate your total costs of exporting, including the direct and indirect costs of producing, packing, shipping, insuring, and marketing your product. You should also factor in the costs of complying with the export requirements, such as certifications, licenses, taxes, and duties. You can use different methods to allocate your costs, such as the absorption costing or the activity-based costing, depending on your accounting system and business goals.

3 Step 3: Choose your pricing method

Once you have your costs, you need to choose a pricing method that suits your export objectives and market conditions. There are three main pricing methods: cost-based, market-based, and value-based. Cost-based pricing involves adding a markup or margin to your costs to determine your price. Market-based pricing involves setting your price based on the prevailing prices in your target market, taking into account the competition and demand. Value-based pricing involves setting your price based on the perceived value of your product to your customers, taking into account the benefits and differentiation you offer.

4 Step 4: Adjust your price for the market

After you have chosen your pricing method, you need to adjust your price for the specific characteristics of your target market. You may need to consider the following factors: currency fluctuations, payment terms, exchange rates, inflation rates, discounts, and allowances. You should also be aware of the psychological aspects of pricing, such as the price-quality relationship, the price sensitivity, and the price rounding. You may need to use different pricing strategies, such as penetration pricing, skimming pricing, or competitive pricing, depending on your market entry and positioning goals.

5 Step 5: Review your distribution channel

Your distribution channel can also affect your export price, as it involves intermediaries that add costs and margins to your product. You should review your distribution channel and identify the roles and responsibilities of each party, such as agents, brokers, wholesalers, and retailers. You should also negotiate the terms and conditions of your distribution agreement, such as the exclusivity, territory, commission, and performance clauses. You should aim to establish a mutually beneficial relationship with your distribution partners and align your pricing policies with theirs.

6 Step 6: Monitor and evaluate your price performance

The final step is to monitor and evaluate your price performance and make adjustments as needed. You should track your sales volume, revenue, profit, and market share, and compare them with your targets and expectations. You should also collect feedback from your customers, distributors, and competitors, and analyze the market trends and changes. You should be flexible and responsive to the market conditions and opportunities, and revise your price strategy accordingly.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?