et-

Export pricing

To become a successful export venture you need to have the right knowledge about export pricing methods. This always includes all items meant for costing and the way your products are provided. As (prospective or performing) exporter, always ensure basic knowledge regarding all activities constituting export pricing.

 

Top tips for export pricing

  1. Ensure your prices are competitive
  2. Ensure all export-related and -associated costs are covered
  3. Know your break-even points
  4. Set realistic profit margins
  5. Know the INCOTERMS 2010 for pricing purposes
  6. Try to negotiate best rates from service providers
  7. Keep abreast of exchange rates
  8. Review all of your cost elements periodically
  9. Include appropriate currencies and HS code(s)
  10. Include minimum order quantities

 

INCOTERMS (2010)

Be very clear about the obligations for seller and buyer. This includes spelling out where ownership is transferred between you as exporter and the importing party. Basically, knowing the INCOTERMS (2010) in detail is indispensable. Check our detailed explanation about INCOTERMS on the logistics & freights page.

 

Cost categories for export pricing

Make sure to cover all export costs when setting  your export pricing. These include local export costs, international export costs and other associated export costs. In more detail, find out all associated costs per category:

Local export costs

All local export costs you should take into account are:

  • Sourcing cost
  • Packaging and labelling
  • Product modification
  • Logistics
  • Warehousing
  • Quality assurance
  • Documentation cost
  • INCOTERMS 2010
  • Product liability insurance or other insurances
  • Forwarding cost
  • Levies
  • Bank charges
  • Cost of funds
International export costs

International export costs to consider include:

  • Freight costs
  • Travel to overseas markets
  • Promotional costs
  • Import duties / taxes
Other associated export costs

Lastly, other associated costs for exports could be:

  • Research into international markets
  • International communications
  • Productions of export literature (including translations)

Pricing methods

The most common methods for price calculation are the ‘cost plus’- and ‘top down’-method. In order to achieve best results in setting your export price we recommend to use both methods together. This means that you calculate:

  • outwards your ex-factory price to the end consumer (cost plus)
  • from the ideal end consumer price backwards (top down)

As both methods have is strengths and weaknesses, you should calculate both and combine these to find the optimum export pricing balance. Please note that this could be different per export destination!

 

Roles of NEPC

We offer numerous services to Nigerian exporters with respect to export pricing. To summarise we:

  • Provide regular capacity building programmes on costing and pricing for export
  • Offers tailor-made assistance to exporters (office, online media, etc.)
  • Provide top-down export market information (international commodity price)
  • Provide bottom-up export market information (local commodity market report)
  • Provide end-market information to exporter to aid export pricing

Questions?

Want to find out what we can do for you? Please contact us directly via the live chat or send a message!