Quoting the perfect price to an International buyer requires close observation of a number of factors. There are many factors on which a buyer need to pay attention before sending the final price and while deciding the payment terms, especially when foreign currencies are involved. Some of the tips for pricing a product perfectly for International sales are:
1) Calculating the total expenditure: The first thing you have to do to ensure perfect pricing is to wisely analyze and calculate the total expenditure involved in the entire process of production, packaging and delivery of the product or providing the service. Before you start calculating major expenses like the taxes, shipping cost or duties etc, there are many minor costs that you should take in account in order to ensure maximum profits. Some of those costs are :
- Cost of international communication, including the cost of translation
- Research cost spent in understanding the market and the needs and requirements of the buyer
- Cost of marketing your product or service in the international market
- Credibility check, [ i.e] the amount spent on checking whether the buyer is credible or not
- Cost of product production
- Product insurance
2) Have different prices for different markets: You need to have different prices for different markets according to the nature and the factors affecting the market.
- Consider the number of competitors present in a market and their offered price before deciding the price of your product or service
- Keep in mind that end consumers may agree to pay different cost in different market and price your products accordingly.
3) Be conscious to price changes: International economy is vulnerable to various fluctuations and changes, while quoting price for international sellers, be conscious about these changes.
- Increase in Shipping cost
- Increase in prices of raw materials
- Currency fluctuations, any changes in the value of currency of any of the countries involved in the deal
- Changes in custom duties, taxes, etc.
While making the quotation, mention clear terms and conditions regrading how these change will affect the price mentioned in the quotation. For example, If you are sending the quotation on 12 October, 2014 and you have to deliver the products on 10 November, 2014, then you should mention that any financial changes occurring between 12 October to 10 November 2014, will affect the offered price mentioned in the quotation.
4) Extending credit terms have its own cost: Every buyer looks for relaxed and long credit terms, so that he can get the money from the end consumers and then make the payment to the supplier. If you are offering adequate credit time then you can quote the product at a higher rate. Most of the buyers will agree to pay a little higher cost for favorable payment terms. This will even provide competitive advantages over other suppliers.