Export Pricing Strategy: 6 Important Considerations

representation of export pricing strategy with piles of coins, a clock and a wooden house on a table

When it comes to exporting goods overseas it’s important that you don’t price yourself out of the market or end up eating into those precious margins. Here we outline six important considerations to help you devise the best possible export pricing strategy for your business.

1/ The Target Market

Identify the best channels in the target market(s)
Conduct thorough market analysis
Identify your competitors and analyse their pricing strategy
Position your products depending on what the market and the consumers are after and are willing to pay

2/ Supply Chain

Costs will very depending on your supply chain and your relationship with overseas partners
Margins are important, but don’t be too greedy to start with
You can go for higher prices if you sell direct to retail
Think about bulk discounts for large orders
Always have your long-term strategy in mind (don’t price too low at the start and consider the additional costs you may incur as you increasingly penetrate the market)

3/ Product Modification

Check that your product complies with local rules and regulations
Implement necessary modifications before entering into negotiations
Investigate the impact on pricing which any modification is going to have on your bottom line and also attractiveness to the market

4/ Packaging

Labelling and packaging may also need to be adapted to the market, thus incurring extra costs
Can you translate your product packaging to save the costs on overlabelling?
Analyse the market to see if your packaging is appealing to the target customers in terms of design
Make sure the material you use is export ready and your pallets are market compliant too

5/ Logistics

Research the best mode of transport to have the best price for your products
Have in mind local infrastructure to be sure your products arrive in the best conditions
Carefully consider the incoterms and who will cover the logistics costs
You may also need to cover import duties, tariffs, local taxes, customs fees, inspection service fees

6/ Documentation

Think ahead of time about costs incurred by specific documentation with every shipment
Documents may need to be translated, again adding extra costs
Commercial Invoices and Agreements may need to be legalised by the relevant Embassy and these are costly!
Certificate of Origin and Health Certificates for outside the EU are often required to accompany shipments which also take time to receive
Each market is different with their document requirements so always worth investigating in advance

Other Factors to Consider

Bank charges, currency fluctuations, payment methods, transaction costs, credit checks, payment terms – cash flow, insurance – international product liability, intellectual property, VAT, business travel expenses
If your company’s costs increase/decrease, what pricing options are available to you?
In order to achieve a market share in your target market, you may need to be aggressive on your target market pricing. Be clear on how low you are willing to go on your margins before any market entry opportunity becomes not viable or too risky