Selling product internationally requires understanding different factors that may have an impact on how the company set the price. The numerous factors that affect pricing decisions are briefly summarized as follows:
- Cost – is the main factor that affects pricing decision. A firm should take into consideration direct cost such as raw materials and indirect cost such as distribution overhead in order to achieve more accurate profit calculations.
- Competition- competing in international market is much more challenging than in the local market, because the exporters have to compete with foreign firms that manufacture under different regulations and market environment. Additionally, competing in developed countries is much harder due to the established advantages by local companies.
- Attitude Towards Countries’ Products – consumers in the international market often develop negative perception against imported goods from the developing countries. Usually products from developed nations possess higher prices than products from developing nations.
- Brand Image – company who has established a strong brand identity such as Apple, can charge a premium price in the international market.
- Government Regulation – the exporting company should be familiar how price can be set in the market in which their goods are sold. These price regulations are government enacted and must be followed at any time. The government may influence the price by controlling the price directly, either setting price ceilings (how high price may be set) or setting price floors (how low price may be set).
- Custom Duties and Taxes Aspect– exporters should find out from the government of importing countries what duties and taxes they would have to pay. The exporter should take such fee while fixing the export price.
- Order Size– prices of export often is determined by the size of shipment. Usually smaller shipments are more expensive than the largest one. Thus, it is very economical to send the large volumes and always define the minimum quantity for export with the customers.
- Positioning Strategy: the firm must develop a positioning strategy for exporting. Some companies prefer value positioning strategy (low average unit cost) others quality positioning strategy. Marketers can also use the demographic- related strategy or competitive positioning strategy.