Selling internationally can give you great benefit, from higher margins to expanded market and a broader range of customers for your company’s products.
Pricing is an extremely critical task for an enterprise and a very powerful strategic variable.
The final price for a product may be influenced by many factors which can be categorized into two main groups:
Internal factors:
Marketing objectives
Financial objectives
Key selling feature
Costs
Organizational consideration
External factors:
Nature of the market and demand
Customer and channel partner expectations
Competition
Other environmental factors (economy, resellers, government)
There are different ways to set selling prices
Cost-based pricing
Market perceived-value pricing
Competition-based pricing
Auction pricing
Methods of payment
One of your greatest risks is that of not being paid. Once international sales have been made, it is essential to use appropriate payment methods in order to reduce the risk on non-payment.
When negotiating terms of payment, please consider: When will payment take place? How will payment take place?
Main methods of payment
Cash/ Payment in advance: this method is risk free for exporter and high risk for importer
Letter of credit(L/Cs) or documentary credits: it is of low risk for both exporter and importer
Bank collections/draft or bills of exchange: It is of risk for exporter if the buyer default on payment , low risk for importer
Selling on open account: high risk for exporter, low risk for importer
Credit cards: potentially high risk for exporter
Consignment sales: high risk for exporter
Foreign currency : High risk for exporter
Counter trade/barter: High risk for exporter
Choice of payment methods and payment methods
Determining factors for choice of payment
Financial risk involved
Credit insurance cover (availability or not)
Number of available suppliers
Relative size of the importer
The importing countries and the currency in use
Tips regarding payment methods
Ask the foreign exchange division of your bank for advice and support
Check on the creditworthiness of importers
Use chambers of commerce to assist you with creditworthiness checks
Contact and negotiate with the importer personally
Explore all venues of personal intervention before using legal experts
