Nobody wants to be wrong, let alone lose money. Jaime Hidalgo, Commercial Director of neo trade, a consultant in International Business, delivers the following recommendations to correctly set the export price and obtain the maximum return from this operation.
- COSTS v / s PROFIT! You must be clear about your fixed and variable costs and what is the profit margin that makes your business attractive. The best thing is to define a band to know what your maximum (ideal) price is, and what is the best price you can offer.
- QUOTE! It is what most SMEs do not do and accept the first quote they receive. Have as many options as possible and if you have doubts, check if the prices of the services attached to the operation are fixed and / or variable, and when they are charged. Many times the rates that providers offer you are very low, but the associated concepts are very high, it is the perfect down payment for you to hire their services.
- A GOOD CUSTOMS AGENT! As they all promise the best service, but many do not answer your cell phone on Friday after lunch and if you have a problem or delay, you will have to assume the cost, you must choose your agent well. Both in export and import there are times, especially to present documents, and if you do not comply with them, you must pay an additional fee so that your operation continues to function and not stay below the ship.
- INVESTIGATE! do "research" as some say. Study the market, its marketing channels, who your competitors are. Knowing what the average retail price is will give you a very good idea of what the final buyer is willing to pay. Once you have that clear, analyze the reverse chain considering the margin of the intermediaries and the cost of logistics to the destination market. If your price is very high and does not allow the importer or distributor to add their margin and reach the price that the buyer is willing to pay, you will not be able to sell, and a business without sale has no future.
- NEGOTIATE! And this is essential. Don't accept a NO the first time. If you object to the price, get what is the price that the customer is willing to pay, and analyze your value chain. To sell you must know your client and more importantly, know your client's client. The biggest mistake of startups and SMEs is that they keep the first NO they receive, they don't go further to the bottom to find out how high its price is. Many times the differences are minimal and they can make an effort if the projection of the business is interesting.
Once you get all the information, you know the market demand, the price of competitors and / or substitutes, and you are clear about your production costs for your entire value chain, you will be ready to set your price. Now, if a client finds your product very expensive, don't be discouraged, remember that the world has 194 countries, divided into 5 continents, with different realities and perspectives, you just have to persevere and be prepared.