Pricing Problems

[abhishreshthaa]

PRICING PROBLEMS


1] Price Escalation

Prices must include the following costs where appropriate:

• The direct cost of manufacture


• Apportioned overhead costs and specific export sales costs


• Apportioned R&D costs


• Export Packaging


• Additional transport costs


• Insurance in transit


• Export insurance


• Agents commissions and margins for other channel members



The exporter should also take account of:

• Additional export documentation and administration costs


• Damage or pilferage in transit


• Tariffs and duties


• Delays in shipment/payment


• Forward exchange cover


• "Commission" to third parties



Several problems with this approach are:



a) The difficulty small firms have in gaining information on prices in foreign markets and appropriate mark-ups



b) The difficulty small firms have in accurately estimating production, distribution and marketing costs



c) The fact that competitors may have considerable scope to reduce prices



d) Currency fluctuation

 

[jitendra05]

PRICING PROBLEMS


1] Price Escalation

Prices must include the following costs where appropriate:

• The direct cost of manufacture


• Apportioned overhead costs and specific export sales costs


• Apportioned R&D costs


• Export Packaging


• Additional transport costs


• Insurance in transit


• Export insurance


• Agents commissions and margins for other channel members



The exporter should also take account of:

• Additional export documentation and administration costs


• Damage or pilferage in transit


• Tariffs and duties


• Delays in shipment/payment


• Forward exchange cover


• "Commission" to third parties



Several problems with this approach are:



a) The difficulty small firms have in gaining information on prices in foreign markets and appropriate mark-ups



b) The difficulty small firms have in accurately estimating production, distribution and marketing costs



c) The fact that competitors may have considerable scope to reduce prices



d) Currency fluctuation

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