Presented by: Rahul Chopra

Export prices are determined by the cost and supply conditions and the demand and competitive conditions. The cost and supply conditions dictate the minimum price the exporter must get while the demand and competitive conditions determine the maximum price he can charge.

Pricing for export market is however more complex and difficult than for the domestic market. Export pricing will have to accommodate into itself the trade practices and the regulations of the overseas market. Export prices should take into account of additional costs involved in respect of packaging, packing , labeling, marking etc., transportation and storage, covering export risks and so on.

1. production costs 2. selling and delivery cost There are 1 types of production costs: A) fixed costs B ) variable costs

Market penetration Market share Market skimming Fighting competition Preventing new entry Shorten pay back period Early cash recovery Meeting export obligation Disposal of surplus Optimum capacity utilization Return on investment Profit maximization

International marketing objectives Costs Competition Product differentiation Exchange rate Market characteristics Image Government factors which include: I. Regulation of margins II. Price floors and ceilings III. Subsidies IV. Tax concessions and exemptions

1. cost based pricing this is also known as cost plus pricing method , it is a common method of pricing. Under this method the price includes a certain percentage of profit margin on the sum total of the full cost of production, marketing costs and an allocation of the overheads. That is, Price is = (fixed costs+ variable costs+overheads+marketing costs)+specified %age of the total costs

2. Market oriented pricing This is a very flexible policy in the sense that it allows the prices to be changed in accordance with the changes in market conditions. The product may be priced high if the demand conditions are very good and the price may be lowered when the market is sluggish if that helps in increasing sales.

3. Following competition Many firms follow the dominant competitors, particularly the price leader , in setting the price. The price leader is the firm which initiates the price trends.

4. Negotiated price Deciding the price by negotiation between the seller and the buyer is common. This is popular with government and institutional purchases.

5. customer determined price In the number of cases, the foreign buyer specifies the price at which he is prepared to buy the product. Whether a price quotation given by the buyer will be acceptable to seller or not will depend on factors like cost structure, conditions of business, objectives, etc.

6. Break even price It is the price for a given level of output at which there is neither any loss nor profit. If the exporter sells below this price he makes a loss and if he sells above this price he makes a profit.

Transfer pricing or intercompany pricing refers to the pricing of goods transferred from operations or sales units in one country to the companys unit elsewhere. The appropriate basis for intracompany transfers often depends on the nature of the subsidiaries , the market conditions, and government policies and regulations. In most of the cases, setting up transfer prices remains the absolute decision of the parent company executives regardless of the firms nationality.

Dumping is refers to selling in the foreign market at a price below the home market price. According to some economists, however, it means selling in the foreign market at a price below the cost of production. If the foreign price is above the home market price, it is referred to as reverse dumping.

1. 2. 3. 4. 5.

Defining pricing objectives Analyzing market considerations Calculating costs Calculating value of incentives Determining export price

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