AD760 International Trade and Logistics
International Pricing of Products
Setting International Prices
Managing International Prices
Pricing and Quotations and Pro Forma Invoices
International Transactions: Pricing Model
Quotations & Pro Forma Invoices
Terms of Sale & Preparation
Working with the Tutorial: Market Research, Part 2
Working with Templates & Attachments related to A2
Factors Affecting International Pricing
1. The Nature of the Product or Industry
A specialized product, or one with a technological edge, gives a company greater price flexibility
2. The location of the Production Facility
Locating manufacturing in countries with low-cost labors enables a firm to charge cheaper prices. Locating factories in or near major markets cuts transportation costs and may eliminate problems created by foreign exchange fluctuations.
3. The Type of Distribution System
Exporting firms rely on independent distributors based abroad, who occasionally modify export pricing to suit their own goals. High distributors mark up prices may harm the manufacturer’s image and pricing strategy in the market.
4. Foreign market considerations
Factors such as climate and other natural conditions may require the firm to spend money to modify a product or distribution.
Managing International Price Escalation
Refers to the problem of end-user prices reaching high levels in the export market.
It is caused by multilayered distribution channels, intermediary margins, tariffs, and other added costs associated with the foreign market.
May result in an excessively high retail price in the target market, creating a competitive disadvantage for the exporter.
There are various strategies to reduce price escalation.
Managing Pricing Under Varying Currency Conditions
The pricing of intermediate or finished goods exchanged among the subsidiaries and affiliates of the same corporate family located in different countries. May be used to repatriate profits from countries that restrict MNEs (multi-national enterprises) from taking their earnings out of the country. May be used to shift profits out of a high corporate tax country into a low corporate tax one, thereby increasing company wide profits.
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