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When setting your prices to international buyers, you must first realistically calculate all your costs. However, cost is not the only consideration in your pricing strategy as there are a number of other factors that you may want to consider, as follows:
Where you pitch your product to the end user will have a big influence on how you price it. If it is a high quality, premium product, your price will be higher, and this high price may well elevate your customers’ perception of it. If it is a mass-produced product and you’re going for high volume sales, your price point will be lower. Depending on the chosen positioning your costs could rise as packaging and marketing expectations may increase costs.
The nature of your customer is important. If you are selling to an intermediary such as a retailer or distributor, they will need to add a margin onto your price so will be looking for a discount. They’re also likely to be buying in larger volume so this will also allow you to set a lower price. If you are selling direct to end users, your price is likely to be higher.
If there is a lot of competition in the market for your products you will need to differentiate in some way and one of the ways you can do this is on price. If there is very little competition, you may be able to elevate your price. This will vary in different overseas markets so don’t assume one approach will suit all countries. Think about your product life cycle and then think about ho wit works internationally.
How sought after is your product? If there is a big demand for your products, the market may tolerate a higher price. Alternatively, high demand could mean higher volume sales and therefore you could lower your prices to be more competitive.
If you are seeking to enter new overseas markets, a low price could help you secure penetration in the market more quickly and help you acquire new contracts. However, be wary of selling too cheaply, as it may not be sustainable, and your customers may be unwilling to tolerate increases after starting the trading relationship at lower prices.
Your flexibility on payment terms could influence the price you can charge. Customers may demand lower prices if you’re asking for payment upfront but could be more receptive to paying more if you offer more favourable, flexible terms. Don’t forget that it costs money to collect money even a credit card payment has a cost, these all need to be factored into your final price.
In a fast-moving market, buyers may be prepared to pay more if you can supply quickly. Your ability to do this will vary from country to country, depending on transport infrastructure and access to frictionless trade.
