Guest Blog, Institute Of Export
One of the most crucial decisions to be made when setting up an export channel is, of course, the price of your products. Setting the right price — and getting it — is not a simple task as there are many variables that can turn the opportunity to make a profit into an unmitigated disaster.
Considering the basic costs incurred in supplying the product is a starting point, but how many first-time exporters will have remembered to factor in the cost of actually collecting the money from customers? It can be expensive to transfer money from an international market; for example the equivalent of BACS incurs hefty charges in some countries.
What about the suitability of the product packaging for different markets? It’s not just the name that could cause offence in a foreign tongue, but colours can have different associations — for example in China, white is linked with death. This may mean a “hidden” cost of repackaging goods for different countries.
Have you really thought through how you will get your product to the customer, anywhere in that country? Consider the broadband infrastructure as well as the actual transportation system, because a lack of access could jeopardise the administration of orders as well as impacting on physical deliveries.
Prompt delivery and continuity of supply are vital to maintain an acceptable price level. A logistically challenging delivery route could prove costly and wipe out any margin on the sale — not to mention the potential damage to your reputation and loss of future custom. Processing a refund costs far more than just the loss of the sale.
Establishing and sustaining the right balance of quality versus price is crucial as customers historically pay more for a recognised and respected brand. Don’t forget that, whilst we may be very proud of our country’s manufacturing prowess and reputation for quality goods, a “made in Britain” tag will attract greater esteem in some countries than others.
Beyond these factors, there are the obvious elements such as duties, local taxes, the impact of currency fluctuations and payment methods to consider. It’s no wonder that our experts at the Institute Of Export are in demand to give new exporters advice on pricing and the many other issues that must be taken into account.
Our training programmes are a great place to start if you need a helping hand. Alternatively check out our extensive choice of professional qualifications which will provide the perfect grounding to trading successfully in international markets.
Do you have any tips on overcoming export pricing challenges that you can share with us?