As an exporter, running a cost analysis to determine and understand your pricing strategy is of utmost importance, in order to meet your business objectives. Several factors play significant roles in determining the price value of imported and exported goods. Demand, insurance, production cost, quality of product, all these and more, determines the price of a product with the intent to generate revenue.

With the key focus on exported goods, price influencing factors could be external factors or internal factors. External factors encapsulates, but are not limited to;

Exchange rate and inflation :

If the value of a local or domestic currency decreases, demands from foreign countries become higher, and purchase becomes cheaper. Thereby increasing export activities of the domestic country. So when a domestic currency crashes against a foreign currency, buyers paying in that strengthened foreign currency has certified chances of purchasing goods at the current price value from the weakened currency.

Tariffs and taxes :

When shipping on cost, insurance and freight (CIF) as an exporter, you must take into consideration, foreign regulatory factors such as tariffs, which are charges imposed by a country on imported goods to their country. CIF export presages the seller or exporter paying for shipping and landing cost of their goods bought. To know the tariffs for your products in a particular country, check the country’s customs site for Harmonized System (HS) codes to know the percentage of tariff charged.

Some internal factors are

Cost and marketing policies :

This constitutes a notable part of pricing. As any finished product goes through several processes and stages, from sourcing materials either in their availability or scarcity, to logistics, packaging, storage, administrative, labour cost and other business related expenses that may accrue. So if the cost of production or amount invested in a product is high, it is reasonable that the finished products would be higher.

Demand and economic conditions :

Supply and demand invariably affects the pricing of any goods. Generally, prices of goods increase when the purchasing power or demand is high. And when the economy downturns, it reduces, to keep sales afloat.

Quality and competition :

Competition driven prices are sadly considerable in all industries globally. In the export industry, local competitors do not pose  a great threat as compared to foreign manufacturers of the same products. Whose advanced country standards, gives them an edge in the sector. As they are exposed to better conditions, environment, regulations and even repute or grace, by virtue of their development, which gives the established countries an advantage over other producers from underdeveloped countries.

Final thoughts 

Every business objective includes sales increase, and overall growth of any company. So irrespective of the market intention, whether you are attempting to penetrate a market, secure expansion or growth, price acclimation should be contemplative and subject to examination on the basis of seasons, innovations, shelf life and other necessary determinatives. 

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