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Determine Entry Strategy and Pricing

Identify likely end-user price

You must decide on the price consumers are likely to pay for the product and work backwards to determine the price of your product to importers.

Determine your initial goal in exporting

Do you want to make a quick profit based on volume sales? Then price your product low. Do you want to establish an image of quality? Then consider pricing your product high. If your firm wants to follow a strategy of learning and long-term growth, then price your product low to a distributor or agent, which will teach you the facets of your new market.

Determine your price based on the following criteria:

  1. Channel length:

    Identify market channel lengths. If the path from the export firm is long for example, through an importer, primary wholesaler, secondary wholesaler, and a retailer to the customer- then your wholesale price must be lower than in the case of a shorter channel.
  2. Market demand:

    How much of a demand is there for your product? Is there a large and emerging middle class that is able to buy your product? What are your competitors charging for this product and based on its attributes, can you charge a different price?
  3. Risks Faced:

    Your Company will have to analyze currency value changes and hedge against them. Impending dollar depreciation may allow the your export firm to gradually increase dollar prices. Country and political risks must be considered.
  4. Costs:

    Factor in your increased costs of product modification, shipping, insurance, tariffs, and taxes abroad.
  5. Terms:

    Included in the price should be your terms of shipping: CIF, FOB, CFR, FAS, etc.


Article Small Business Development Center

The Small Business Development Center (SBDC) is wise stop for any small businessperson interested in exporting. Their goal is to help you lay out a strategy to meet your business needs. Basic services are Free.

An Interview with Professor Mike Giambattista

Professor Mike Giambattista shares his professional international business experience and recommendations for exporters seeking to start or increase their efforts.

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