Hi everyone it’s Victoria at BOLST Global, hope you’re doing really well. So today i wanted to talk about export pricing and the importance of getting it right from the outset.
This is something that we see a lot of brands make a mistake with time and time again and it’s easy to understand why but with a few key tips that i’m going to give you today i hope that you will be better positioned for future opportunities globally.
So as i mentioned it’s very easy to give pricing away when you’re approached, particularly from maybe a retailer chain that’s interested in listing your products in an overseas market, a distributor who’d like to buy product from you and sell it on in their designated market or channel.
An agent for example who is usually someone that will take your products find your customers and take a sales commission, or equally something such as an export house or a consolidator that we may call them who are based in your home market and have customers in a certain geographies whereby they can take the hassle out of exporting, and label document and supply your products into their customer bases around the world. There’s lots of options here so how do you create your pricing in a way that will stack up.
The main thing here is to remember that you have to think about the price in which you can sell within your target market and be able to some extent work back from that, because if you decide to go direct to a retailer for example, that can be a great option and a great starting point to enter the market however, if longer term you see the opportunity you would like to develop that market more extensively, have other customers in those markets potentially other channels there then unless you’re ready or able or from a strategic point if you want to open up your own entity there then you are going to need extra support and potentially extra partners to help realize that, they of course will also need a margin within the value chain so if your pricing is too low when you’re selling direct to a retailer or to another uk consolidator for example, then you risk not having enough margin in the value chain for another partner to come into play and really help you boost market penetration in that market. So it’s always worth considering that and in the same way with your domestic market you may sell out at a higher price direct to retail and have wholesalers and other intermediaries working with you in the domestic market you should apply the same approach on an international basis.
The other thing to think about internationally as well is that there are extra costs when trading and from this i mean within the product itself you may need to put the language of the of the target market on the product itself, that may be a sticker that may be actually printed text and obviously that incurs extra cost extra packaging etc in order to do so there may be needs for product adaptation potentially as well and your readiness and willingness to do that but which will also impact on the pricing basis.
Equally other hidden costs that a lot of brands don’t consider such as documentation with each shipment, you will require usually a set of documents that need to accompany those items into the market to clear customs and some of those can be quite costly, particularly also when registering products into your target markets there may be costs not just in creating documents for registration but equally in potentially certifying or legalising those documents with the relevant embassies and local chambers of commerce.
So you can see that it can be quite complex and there’s quite a lot to consider with your pricing, the other thing to consider also is your inco terms and we’ve done another FAQ and video on the importance of inco terms because these are on the terms on which you are trading, and it does then define the risks and responsibilities but equally the costs that both the buyer and the seller are incurring and that’s always something worth considering in terms of the way you wish to do business overseas and also ways in which your customer may accept to trade with you as well. So lots to think about there, the top tips and takeaways from this is really look at your value chain, look at your longer term strategy for internationalisation and that particular market in which you’re operating.
If it’s a more transactional reactive way of working and any opportunity is easy to service through the mode in which you’re operating and your pricing strategy from your home market then fair enough however, if you are looking to really start to grow internationally, enter markets and penetrate them well you do need to take a step back consider the route to market your longer term strategy and build your pricing and your value chain based off that. I hope that was helpful if anybody’s got any questions or queries on this aspect of exporting don’t hesitate to reach out to us at Bolst Global and i hope you are all doing great take care and we’ll speak soon.