chapter  10
7 Pages

Foreign pricing

WithMarlies Harlaar, Otto de Leeuw

In this chapter, the authors lead people through the export price-setting process, introducing people to the major cost drivers and useful export price models on the way. Just as the name suggests, cost-plus pricing is a matter of adding on the cost of export to reach the export price. Being based on standard models, it is easy to calculate. This means pricing decisions can be made at a relatively junior level. Export pricing is generally based on the same cost drivers that determine the domestic cost price. The main difference comes from additional export-specific costs. The remaining export-specific costs come from the changes made to the marketing mix and the changes made to facilitate or enhance management of the export business. As an exporter, people won’t necessarily be making bigger profits than a company operating only on the domestic market. However, exports usually create higher turnover and this can benefit the continuity of our business.