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Export pricing strategy for your global business

Export pricing strategy is based on pricing methods & used to set the perfect price for the goods to be exported. Learn more about its factors and methods.

When you want to start an export business or expand your business globally, it is important to set the right export pricing strategy for your products. While this sounds easy, it requires a good amount of analysis and research. Market price fluctuations, raw material cost and shipping costs are some of the factors that often change. So, your pricing strategy needs to be decided after considering the above-mentioned and a few other factors.

What is export pricing?

Export pricing is the method of creating a strategy and finalizing prices for goods and services, which are intended to be sold internationally. Unlike domestic selling, deciding an export pricing strategy requires more research and understanding of market situation and competition. Revenue goals, marketing objectives, target audience, brand positioning and external factors like consumer demand, competitor pricing and economic trends – all impact your business and strategy.

What are the factors to be considered in export pricing strategy?

Some of the factors that determine export pricing are:

Competition & survival in the long run:

Consumer products usually see high levels of competition, especially in the international market. As an exporter, you will also compete with local brands of a particular country and its economic conditions. The first step that an exporter must take is to analyse competitor’s and overall price for that product category in the market in order to survive for a long time.

Product demand:

When the demand for a particular product increases, the price of the set goods is also bound to increase. Before you decide the pricing strategy for your export business it is important to analyse the demand for your product category and understand what can be expected in the coming years.

Profit growth:

Set a price that would generate a good amount of revenue and profit. One of the major objectives of starting an export business is to increase sales and overall growth of the company. So, the pricing strategy needs to be finalized to ensure it generates higher cash flow and rate of return.

Industry leaders:

Becoming thought leadership and acquiring a top position in the export market is an important factor, in order to make the export pricing work. By charging a price, that makes a noticeable difference, will help you to set up your own unique place in the market.

Nature of purchase:

The price also depends on the nature of purchase by a customer. For instance, a person is usually willing to pay a higher price when shopping for gift items.

Product differentiation and brand image:

If a product is well differentiated from other brands within the industry with good brand recognition, manufacturers are usually in a comfortable position to charge higher prices. Famous brands command higher prices due to their image and goodwill.

How to calculate cost for your product?

As an exporter, while calculating the cost of your product, you need to add up all the expenses that you have incurred from collecting raw materials to manufacturing the final product that reaches your customer. For instance, if you are an apparel manufacturer-exporter, the total cost will start acquiring machinery, material for clothes to packaging, labour and delivery.

Export pricing strategies you must know about

Pricing strategy helps in determining a mechanism with respect to cost of goods while selling them to customers. Some of the common pricing strategies in the market are:

Skimming pricing strategy

An exporter uses this strategy to reimburse preliminary expenses. In this strategy, initially, a high price is charged and then the price is gradually reduced to increase market share and value. If you are dealing with commodities in established markets, this is a valuable strategy option.

Penetration pricing strategy

A pricing strategy in which an exporter charges a low price to establish the brand in the market and clear competition is penetration pricing strategy. This policy works for often-used items of mass consumption.

Marginal cost pricing

Under this method, an exporter only considers variable or direct costs while setting the product price for international markets. Here, an exporter does not aim to recovering preliminary or fixed cost from sales and is willing to undergo a slower journey to reach breakeven and profits.

Market oriented pricing

Market oriented pricing is one of the most common approaches to export pricing and is a flexible method of pricing as it aims at arriving at a price, which is based on changing market conditions. This strategy can be useful for commodities that are available for sale in stable and well-established markets.

Competitors’ pricing

Competitive pricing is a strategy where costs are decided based on competitors’ pricing in a particular market or industry.

Tips to set the right price for your product

1. Customers are particular about the quality and prices of the product they are planning to buy.
2. The volume of sales and market demand depend on the right pricing policy.
3. The competition in the international market also depends on the price fixed for the product.
4. Setting a perfect price, will decide the success and failure of your export products and services.
5. A good pricing strategy helps in increasing profit and raising revenue, also enhancing the market share of the product.
6. Currency fluctuations is an important factor to consider, while setting your strategy. Selling at a proper time and price will help you to cover possible losses.
7. For certain products, you can offer varying prices in different volume-based slabs of purchase orders.
8. With export pricing, you can cut unnecessary expenses in your supply chain, and also know about different opportunities about various distribution channels.

For an exporter, one of the key steps is setting a fixed price for the product – export pricing. When selling internationally, it is important to consider various factors before deciding the price of your products. To make selling on international marketplaces easier, Amazon offers Automate Pricing to registered exporters.

What is Automate Pricing?

Pricing is a key factor for Featured Offer (Buy Box) eligibility on Amazon product detail pages. Amazon’s Automate Pricing tool helps you adjust your prices quickly and automatically against competition to increase your chance of becoming the Featured Offer. Choose the listings you want to enroll, set price limits, and let Amazon help keep your prices sharp 24 hours a day, 7 days a week—while you focus on other aspects of your business.

How does Amazon Global Selling facilitate exports?

Amazon Global Selling is an e-commerce exports program as it was designed to help sellers, use Amazon’s platform and fulfilment network, to reach millions of customers all around the world, globally. It is one of the most easy and effective way to start and build a significant exports business through ecommerce. This program provides the required tools that help exporters to reach millions of customers worldwide. Export from India and maximize your sales as well as profits.

Frequently Asked Questions

What is the most effective pricing strategy?

Market-driven pricing strategy is one of the most common practices that an exporter uses while setting the price of products. Under this approach, you keep your product’s price flexible and responsive to market conditions like demand, supply and inflation.

What is the simplest pricing strategy?

Marginal cost pricing is one of the simplest and effective pricing strategies. In this strategy, an exporter only considers any direct or variable cost, while setting the product price. Also, an exporter does not plan to recover preliminary or fixed costs from sales.

Why should export pricing strategy be used?

Export pricing is an opportunity to identify any kind of duplicate or necessary expenses in your supply chain. Export pricing strategy allows you to keep your product price flexible and responsive to market conditions.

What strategy should I use to sell on Amazon internationally?

It is advisable to consider international market conditions, international customers and competitors’ pricing. By registering as an Amazon global seller, your products reach over 300 million customers across the world. The more customers view your products, the higher chances of your sales.It is advisable to consider international market conditions, international customers and competitors’ pricing. By registering as an Amazon global seller, your products reach over 300 million customers across the world. The more customers view your products, the higher chances of your sales.

Published on August 29, 2022.

Sources:
1. https://www.researchgate.net/publication/260178567_Competitive_Export_Pricing_The_Influence_of_the_Information_Context
2. https://www.trade.gov/pricing-strategy
3. https://agriexchange.apeda.gov.in/Ready%20Reckoner/Export_Costing_Pricing.aspx
4. https://howtoexportimport.com/Export-Pricing-Strategies-4580.aspx

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*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.

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