Pricing cost.
The simplest method of pricing is to add a standard amount to the cost of the product. For example, a retailer of electrical appliances manufacturer pays $ 20 for a toaster and sells it to 30, ie, an increase of 50 percent. The retailer's gross margin is $ 10 and if the costs of operation of the store are $ 8 per unit sold, the profit margin will be $ 2.
It is likely that the producer uses such pricing. If the standard manufacturing cost was $ 16, perhaps increased by 25 percent to sell to retailers at 20.
The increase varies greatly depending on the product. In supermarkets it is normal that the increase over the price is 9 percent for baby food, 14 in tobacco, 20 bakeries, 27 dried food and vegetables, 37 spices and extracts, and 50 percent in greeting cards.
pricing increments remains popular. First, the seller has more certainty of costs rather than demand. By linking prices and costs, simplify the pricing, and the seller does not have to adjust when demand varies. Second, when every particular branch companies use the same method, the prices tend to be similar prices and competition in this regard is limited. Third, many believe that prices determined by the cost plus utilities are equitable for both buyer and seller. The investment performance of the seller is just, and not take advantage of buyers when demand increases.
pricing according to an analysis of breakeven and profit target.
In this case, the company tries to determine the price that allows them to be in equilibrium or for the utilities that are proposed. General Motors uses this approach, it sets the price of their cars according to a yield of 15 to 20 percent of their investment. Utilities also use it, because they are forced to earn a fair return on their investment. In this case we use the concept of break-even chart, which shows the total cost and total revenue in different volumes.
When price increases, demand decreases, and the market could not acquire the minimum amount required to reach equilibrium with the highest price. Much depends on the relationship between price and demand. For example, suppose the company estimated with fixed and variable costs of time, the price should be $ 30 per unit to reach the desired target profits, but market research shows that few consumers pay over 25 for the product. Then the company must cut costs to lower the breakeven point, so it is possible to set the price that consumers expect. Thus, although pricing by analysis of breakeven and profit target can help the company determine the minimum price needed to cover the expected costs and profits goal, does not take into account the relationship between price and demand. When using this method, the company also analyzes the impact of price on sales volume necessary to achieve the profit goal and the likelihood that the necessary sales volume reached in each possible price.
pricing based on demand
When product demand is high, its price tends to rise, while in times of recession is falling, and all this happens even if the costs do not vary . In the case of raising our price decrease our sales and vice versa.
economic Like all generalizations there are many exceptions to these theories, luxury goods sales rising as prices climb, sales are stable even if prices rise in monopoly situations, etc.
methods of pricing based on demand try to bring prices to the demand, the most common are:
1 Price Discrimination. involves selling the same product at different prices, depending on location, the customer or the time of the year in question.
2 Experimentation. test consists of a period of time, various prices for the same product, in order to determine the impact of such demand, and establish the most suitable for the objectives of the company.
3 Intuition. consists in setting prices based on the assumption that these effects will have on demand.
pricing depending on the buyer.
An increasing number of companies base their prices on the product's perceived value. The pricing based on perceived value uses the opinion of the buyer, not seller's costs as a key to determine. In the mix marketing, the company uses the independent variables of the price to build a perceived value in the mind of the buyer, the price is determined by the perceived value.
Consider the prices charged by restaurants for the same items. A consumer who asks for a cup of coffee and a piece of apple pie can pay $ 1.25 at the counter of a vending machine, 2 in a family restaurant; 3.50 in the cafe of a hotel, 5 for service in your hotel room 7 in an elegant setting. Each facility charges more than the previous value added to their environment.
Any company that uses this approach should determine the value that buyers have in mind for various offers. In the last example, consumers could Asked what he would pay for the same cake and coffee in a different environment. Sometimes they ask how they can pay for added value. If the price set by the seller is greater than the price charged by the buyer, their sales will decrease. Many companies put overpricing their products and they do not sell well, but their income is lower than that which would increase the price to the level of perceived value.
pricing based on competition
consists of fixing a price to save a certain relation to the prices of competitors. These prices based on our market position will be set above, at or below the competition.
Pricing Strategies.
penetration rates. low prices were initially set to enter a closed market dominated by competition.
Maximum Prices. price is initially set high, looking for the prestige and higher sales sacrificed by higher profit margin.
will have lower prices and can have drawbacks. When this strategy is done deliberately to give prestige to the product and then generalize it is called "skimming strategy."
Introductory prices. launched a product to market with a temporary price, as a promotional offer, leaving not clearly define what will be its final price. Is a hands-free policy for the company, as the subsequent rise is not considered as such, but that the disappearance of cyclical price.
• high Price: This option may be appropriate if you are selling a product that is new and unique and is trying to position the product at the higher end of market . This option produces a higher profit margin but may attract competition.
• Moderate price: With this option you are trying to match prices of competitors, to establish a market position and generate a reasonable profit margin.
• Low price: may be relevant when trying to reduce inventory, when you establish a market presence quickly, or do not want to commit to long-term market. This option can prevent competition but it generates a profit margin is lower.
must consider the following pricing strategy:
When exporting their products to different countries, it must determine whether to use:
• Flexible pricing : product is sold at different prices in different markets. •
static Prices: the same price applies to all markets.
Some say that the "price is the scarecrow" sales, this is absolutely false and to explain I will outline a definition: "Price." Is the monetary value of the thing is the amount of coins you collect "...
What is true is that the price is irrelevant, if the value of the thing exceeds expectations client, or just saying ... "Value is the price people are willing to pay for the benefits to which you will use or the attributes of customer sees the product to buy" ...
Analyzing the two definitions follows that if the customer needs to buy has value to him and the value exceeds the price, definitely buy it, because no one will stop buying something for its value "priceless."
Some companies that want to sell, they lower the price, thinking that if they sell it cheaply sold all his stock. But time will show that by selling low price people will not buy because they think has no value, "not worth much."
can not sell to all leads to high price, must sell to your target audience: anyone who wants, wants and appreciates what you produce at the right price (right, right.)
short:
1. Try to add value to your product, make visible attributes do coveted, desirable.
2. Remember that they can sell to everyone, but you can sell your product to your target audience, one that defined the design it.
3. Do not hesitate to set the price, if it has value if people need it and if you have distinctive attributes, exceeding its jurisdiction.
4. Think about your product values \u200b\u200band the needs of their clients and see the price is just a consequence of the value of the product.
5. No one will stop buying what you need and have a fair price.
6. But beware: if you decided to sell at low price because it has great production or want to sell large volumes, that's fine if they planned it well, but analyze "if it is profitable."
7. If it is not profitable does not sell at a low price or high price.
Source: navarrod@intercable.net.ve
L you used for the export prices are the product of the interaction of internal, external.
1. Strategy
past, is vital to make a thorough examination of the company's current status, potential, ambition, ability and study the feasibility of the project. 3 aspects are considered basic strategy. business, logistics, market. The company must be tested on fiscal commitments, overall competitiveness, administration and management, planning. The proper transport, proper insurance, customs clearance successful and above all, diversification and constant updating in terms of prices are the result of an efficient logistics plan. Product placement in the foreign market is the natural consequence of identifying destination, watching the competitors, potential customers, in general, a good market research.
Following the orthodox theory, there are four "P" to ensure success in this task (Price, Promotion, Product and place or distribution -square-). The distribution is accomplished using appropriate channels and market research, the product is necessarily subject to changes in standards, labels, packaging ...
Competitiveness is ensured if it has one of the following characteristics: cost leadership, differentiation or market segmentation.
has high production costs are reduced and mass marking covers, the value comes from the widespread consumption of the product.
a selective market is a distinct market, allows for large profit margins and low sales, for it must be against a clearly differentiated product, something that does not exist, that specific feature or impossible to copy or However, much prestige it is then necessary strengths in the competitive advantages of design, image and / or quality, not looking to compete with low price.
The segmentation identified target markets with potential. A market segment consists of people who have some distinct characteristics in common.
short:
Consumer needs
+ business strength
weak competitor +
= opportunity
A good export marketing strategy allows the company and its products remain and consolidate before in domestic markets.
2. Basics for quote
The cost is the sum of the expenditures made to obtain a good or service. Price is the exchange value of the product or service that is established between the buyer and seller, price = cost + profit.
Quote relates to the commitment that involves not only the price, but general conditions, rights and obligations of the parties to the delivery of goods.
two techniques to determine export prices costing and pricing . The first is obtained by adding the costs of production and transportation costs. The pricing is estimated by subtracting the international price the cost of transport.
If the price of goods is subtracted dsitribución channel margins, the charges, freight and insurance, customs costs and cost of packaging, among others, discuss pricing for pricing to Unlike add to earnings the contribution to fixed costs + variable costs - price of silver, which is costing .
The price is the determination of price and trading limits in accordance with the terms of international trade and sale and discount policies (promotion, economies of scale).
The export price thus includes customs clearance, transportation, freight, duties and taxes, distribution channels, packaging and packing, etc..
3. International trade terms (INCOTERMS )
define responsibilities between buyer and seller, transfer risks are not mandatory to use but its adoption is universal. Created in 1936 by international chambers of commerce, the INCOTERMS regulate rights and obligations in a purchase agreement, must be specified in the quotation and invoice. Basically there are 4 groups:
simplify the collection costs of goods, payment of inspection, file export and import, contract of carriage and insurance of goods to their final destination.
It created something similar, called RAFTD, but only applies to their territory and have no legal validity.
4. Domestic costs and export costs by the company
Costs are divided into fixed and variable. The former are autonomous, depend on the production variables.
There are formulas that specify the level of production and breakeven others:
Total cost = Fixed cost + Variable cost
point balance (volume) = Fixed cost / unit price - unit variable cost
point of equilibrium (price ) = Fixed cost + (variable cost * amount) / amount
Contribution margin = price - variable cost
5. Export expenses, external
carriers, brokers, insurers, procedures, documents and certificates, visa consular, letters of credit applications, quotes.
6. Negotiating
To negotiate you need to know to perfection the advantages and disadvantages of the product and even better, competition, be flexible and not make concessions without asking anything in return.
The importer may complain about high prices and request a reduction, the exporter requests and justifications for such a statement emphasizes the benefits.
The importer says that there are better deals with others, the exporter requests details on these offers, inquires on its seriousness.
Calls counteroffers and discounts, the exporter must not improve the offer without asking anything in return, must hold the buyer's interest to make concrete suggestions.
Calls a specific price, the exporter recalculated and does not accept immediately, there are risks
claims that the product is good for a high price, he accepts, gives details of costs discussed further enhances benefits.
Finally, it is essential to know the price range of variation for a good bargain
Broadly speaking, the price is the relevant factor to compete, is best calculated by the system pricing should be calculated and not estimated. Beware of negotiation.
Source: Formation of export price
Official Rules of the Chamber of Commerce (ICC) for the interpretation of trade terms commonly used in the purchase and sale of goods.
| | incoterms | transportation | ||
| E | output | Ex Works In Factory (... named place) | Any means of transportation | |
| | Main carriage unpaid | Free Carrier Free Carrier (... named place) | Any means of transportation | |
| | | Free Alongside Ship Free Alongside Ship (... named port of shipment) | Shipping and inland waterway only | |
| | | Free on Board Free On Board (... named port of shipment) | Sea and inland waterway only | |
| | Transportation | principal paid Cost and Freight Cost and Freight (... named port of destination) | Sea and inland waterway only | |
| | | Cost, Insurance and Freight Cost Insurance and Freight (... named port of destination) | Sea and inland waterway only | |
| | | Carriage Paid To Carriage Paid To (... named place of destination) | Any means of transportation | |
| | | Carriage and Insurance Paid To Carriage and Insurance Paid To (... named place of destination) | Any means of transport
| |
| | Arrival | Frontier (... named place) | Any means of transportation | |
| | | on Ship (... named port of destination) | Maritime and inland waterways exclusively internal | |
| | | Quay (... named port of destination) | Sea and inland waterway only | |
| | | Delivered Duty Unpaid Delivered Duty Unpaid (... named place of destination) | Any means of transportation | |
| | | Delivered Duty Paid Delivered Duty Paid (... Named place of destination) | Any means of transportation | |
| incoterms | MEANING (Text of the ICC) |
| EXW (Ex Works) -Works (... named place) | "In Plant" means the seller delivers the goods when available to the buyer at the seller's premises or another named place (ie works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle. This term thus represents the minimum obligation the seller and the buyer has to bear all costs and risks inherent in the receipt of the goods at the premises of the seller. However, if the parties wish the seller is responsible for the loading of the goods on departure and to bear the risks and all costs of such an operation should be made clear by adding expressions explicit in this regard in the contract of sale. This term should not be used when the buyer can not carry out the export formalities directly or indirectly. In such circumstances, the FCA term should be used, provided the seller agrees to load at his cost and risk. |
| FCA (Free Carrier) Free Carrier (... named place) | "Free Carrier" means that the seller delivers the goods, cleared for export to the carrier nominated by the buyer at the named place. It should be noted that the chosen place of delivery affect the obligations of loading and unloading the goods at that place. If delivery takes place at the premises of the seller, it is responsible for loading. If delivery occurs elsewhere, the seller is not responsible for unloading. This term may be used for any mode of transport including multimodal transport. "Carrier" means any person who, in a contract of carriage, undertakes to perform or to make a rail, road, air, sea, inland waterway or by a combination of these modes. If the buyer nominates a person other than a carrier to receive the goods, the seller is deemed to have fulfilled its obligation to deliver the goods when delivered to that person. |
| CPT (Carriage Paid To) Carriage Paid To (... named place of destination) | "Carriage Paid To" means that the seller delivers when the goods available to the carrier nominated by him but must in addition pay the cost of carriage necessary to bring the goods to destination. This means that the buyer bears all risks and any other costs incurred after the goods have been so delivered. "Carrier" means any person who, in a contract of carriage, undertakes to perform or to make a rail, road, air, sea, inland waterway or by a combination of these modes. If subsequent carriers are used for transport to the agreed destination, the risk passes when the goods have been delivered to the first carrier. The CPT term requires the seller to clear the goods for export. This term may be used irrespective of the mode of transport including multimodal transport |
| (Carriage and Insurance Paid To) Carriage and Insurance Paid To (... named place of destination) | "Carriage and Insurance Paid up" means that the seller delivers when the goods available to the carrier nominated by itself but must in addition pay the cost of carriage necessary to bring the goods to destination. This means that the buyer bears all risks and any additional costs occurring after the goods have been so delivered. However, in CIP the seller also has to procure insurance against the risk borne by the buyer for loss or damage of goods during transport. Consequently, the seller contracts for insurance and pays the insurance premium. The buyer should note that, as that term CIP, it requires the seller to obtain insurance only on minimum cover. If the buyer wishes to have the protection of greater cover, need to agree as much expressly with the seller or to make additional insurance. "Carrier" means any person who, in a contract of carriage, undertakes to perform or to make a rail, road, air, sea, inland waterway or by a combination of these modes of transport . If subsequent carriers are used for transportation to the place of destination, the risk passes when the goods have been delivered to the first carrier. The CIP term requires the seller to clear the goods for export. This term may be used irrespective of the mode of transport including multimodal transport |
| DAF (Delivered at Frontier) Delivered at Frontier (... named place ) | "Delivered at Frontier" means that the seller delivers when the goods are made available to the buyer on the arriving means of transport not unloaded at the point and place of the frontier, but before the customs border of the adjoining country to be the goods cleared for export but not import . The term "frontier" may be used for any frontier including that of the exporting country. Therefore, it is vitally important to define the boundary in question precisely by always naming the point and place in the term agreed DAF. However, if the parties wish the seller is responsible for the unloading Merchandise transport and to bear the risks and costs of unloading, this should be clear by adding explicit wording to this effect in the contract of sale. This term may be used irrespective of the mode of transport when goods are to be delivered at a land border. When delivery is to take place in the port of destination, on board a ship or on the quay (wharf), should be used DES or DEQ terms |
| DDU (Delivered Duty Unpaid) Delivered Duty Unpaid (... named place of destination) | "Delivered duty paid" means that the seller delivers the goods to the buyer, not cleared for import and not unloaded from the media transport at arrival at the destination. The seller must bear all costs and risks involved in bringing the goods thereto, other than, where applicable, any "right" (which term includes the responsibility and risks of carrying out customs formalities and payment of formalities, duties customs, taxes and other charges) for import in the country of destination. This "right" borne by the buyer as well as any costs and risks caused by failure to clear the goods for import. However, if the parties wish the seller to carry out customs formalities and bear the costs and risks resulting therefrom as well as some of the costs payable upon import of the goods, should be made clear by adding expressions explicit in this regard in the contract of sale. This term may be used irrespective of the mode of transport but when delivery is to take place in the port of destination on board the ship or on the quay (wharf), should then be used DES or DEQ terms |
| DDP (Delivered Duty Paid) Delivered Duty Paid (... named place of destination) | "Delivered Duty Paid" means that the seller delivers the goods to the buyer, cleared for import and not unloaded from any means of transport at arrival at the destination. The seller must bear all costs and risks involved in bringing the goods thereto including, where appropriate, any "right" (which term includes the responsibility and risk for customs formalities and payment procedures , customs duties, taxes and other charges) for import in the country. While the EXW term represents the minimum obligation for the seller, DDP represents the maximum obligation. This term should not be used if the seller is unable directly or indirectly import licensing. However, if the parties wish to exclude from the seller's obligations some of the costs payable upon import of the goods (such as value added tax: VAT) should be made clear by adding explicit wording to this effect in the contract of sale. If the parties wish the buyer assumes all risks and costs of import, the DDU term should be used. This term may be used irrespective of the mode of transport but when delivery is to take place in the port of destination on board the ship or on the quay (wharf) should be used DES or DEQ terms |
shipping and inland waterway only
| incoterms | MEANING (Text of the ICC) |
| FAS (Free Alongside Ship) Free Alongside Ship (... named port of shipment) | "Free Alongside Ship" means that the seller delivers when the goods are placed alongside the vessel at the port of shipment. This means that the buyer has to bear all costs and risks of loss or damage of goods from that moment. The FAS term requires the seller to clear the goods for export. IS A REVERSAL FROM PREVIOUS INCOTERMS VERSIONS WHICH REQUIRED THE BUYER TO ARRANGE FOR EXPORT CLEARANCE. However, if the parties wish the buyer to clear the goods for export should be made clear by adding explicit wording to this effect in the contract of sale. This term can only be used for transport by sea or by inland waterways |
| FOB (Free on Board) Free On Board (... named port of shipment) | "Free on Board" means the seller delivers when the goods pass the ship's rail at the port of shipment. This means that the buyer must bear all costs and risks of loss or damage to goods from that point. The FOB term requires the seller to clear the goods for export. This term may be used only for transport by sea or inland waterways. If the parties do not intend to deliver the goods across the time that passes the ship's rail, the FCA term should be used |
| CFR (Cost and Freight) Cost and Freight (... named port of destination) | "Cost and Freight" means that the seller delivers when the goods pass the ship's rail at the port of embarkation. The seller must pay the costs and freight necessary to bring the goods to the port of destination BUT the risk of loss or damage of goods, as well as any additional costs due to events occurring after the time delivery, are transferred from seller to buyer. The CFR term requires the seller to the customs clearance of goods for export. This term may be used only for transport by sea or inland waterways. If the parties do not intend to deliver the goods across the time exceeds the ship's rail, the CPT term should be used |
| ( Cost, Insurance and Freight) Cost Insurance and Freight (... named port of destination) | "Cost, Insurance and Freight" means that the seller delivers when the goods pass the ship's rail at the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the port of destination BUT the risk of loss or damage of goods, as well as any additional costs due to events occurring after the time delivery, are transferred from seller to buyer. However, in CIF the seller also has to procure marine insurance against buyer's risk for loss or damage of goods during transport. Consequently, the seller contracts for insurance and pays the insurance premium. The buyer should note that under the CIF term the seller is obliged to obtain insurance only on minimum cover. If the buyer wants more coverage, you will need to agree as much expressly with the seller or to make his own extra insurance. The CIF term requires the seller to clear the goods for export. This term may be used only for transport by sea or inland waterways. If the parties do not intend to deliver the goods across the time that passes the ship's rail, the CIP term should be used |
| DES (Delivered Ex Ship) delivery ex ship (... named port of destination) | "Delivered Ex Ship" means that the seller delivers when the goods are made available to the buyer on board the ship not cleared for the import at the destination port agreed. The seller must bear all costs and risks involved in bringing the goods to the port of destination before discharging. If the parties wish the seller to bear the costs and risks of discharging the goods, DEQ term should be used. The term can be used only when the goods be delivered on board a vessel at the port of destination, after transport by sea, inland waterway or multimodal transport |
| DEQ (Delivered Ex Quay) Delivered Ex Quay (... named port of destination) | "Delivered Ex Quay" means that the seller delivers when the goods are placed at the disposal of the buyer not cleared for import on the quay (wharf) at the port of destination. The seller has to bear costs and risks involved in bringing the goods to the port of destination and discharging the goods on the quay (wharf). The DEQ term requires the buyer of the goods customs clearance for imports and payment of all formalities, duties, taxes and other charges upon import. IS A REVERSAL FROM PREVIOUS VERSIONS OF INCOTERMS it charged to SELLER'S CLEARANCE FOR IMPORT. If the parties wish to include in the seller's obligations all or part of the costs payable upon import of the goods should be made clear by adding explicit wording to this effect in the contract of sale. This term may be used only when the goods are delivered, after being transported by sea routes inland waterway or multimodal transport on discharging from a vessel onto the quay (wharf) at the port of destination. However, if the parties wish to include in the seller's obligations the risks and costs of handling the goods from the quay to another place (warehouse, terminal, transport station, etc..) Inside or outside the port, should use DDU or DDP terms |
