Unit price and total value in price clause The standard format of a price in international trade has four components: pricing currency, units of measurement, unit price and trade terms. Generally pricing currency is the same as the payment currency. As units of measurement are different in different countries, they must be stipulated clearly. Unit price is the value of the goods in each unit of measurement. Trade terms can be put at the beginning or at the end of the price. But all the terms should be followed by the name of a place which is defined appropriately by the Incoterms 2010.
Pricing Components in Export Commodities Export price is comprised of costs, expenses/ charges and anticipated profit.Other factors such as commission and discount may also affect export price.
Chapter Two Part A English Tex
Pricing Components of Commodity
Cost (1) Production cost Computing the actual cost of producing a product is of the core importance in pricing. Production cost normally include the material costs, labor cost, fixed costs and packing cost. (2) Sales cost Sales cost refers to costs relevant to international marketing and sales activities. Exporters might have to advertise their products before entering a foreign market. They might need to participate in international trade fairs and exhibitions to promote their products. They even need to pay local agents for assistance and cooperation. Such cross-country events might be great spending and cost a lot of money.
Chapter Two Price of Commodity 商品价格
Warming-up Exercise Part A English Tex Part B Bilingual Tex
Chapter Two Warming-up Exercise
Answer the following questions.
Chapter Two Part A Englisof Commodity
Examples Unit price: at USD330.4/piece CIF New York Total value: USD33040 (Say US dollars thirty-three thousand and forty only) Unit price: at GBP 95 per M／T CIF London Total value: GBP 4750 (Say pounds sterling four thousand seven hundred and fifty only)
1 What factors shall be taken into consideration in export pricing?
2 What are the components in a unit price?
Chapter Two Part A English Tex
Pricing Components of Commodity
Pricing terms play an essential role in a contract. They are the core terms which can directly affect buyer and seller’s mutual interests and the possibility of a transaction. It’s important to learn what are included in export price and establish the terms of price properly in international trade practices.
Chapter Two Part A English Tex
Pricing Components of Commodity
Expenses/Charges Expenses/charges are divided into two big parts: domestic costs and overseas costs. Domestic costs cover local warehousing and transportation costs (warehouse to freight terminal, station, airport, container yard, etc.). There are other cost items such as expenses for permit application, banking charges (loan interest, handling charges, etc.), estimated loss (cargo loss, leakage, damage, deterioration, etc.) and port charges. Overseas costs are mainly comprised of three aspects: overseas freight(port of shipment to port of destination), overseas premiums (overseas cargo transport insurance) and commission if there is any middleman. Anticipated profit Anticipated profit is another essential part in pricing because it is directly impacting the price level of the product. Setting the anticipated profit has a lot to do with the competition in competing products, industry and market and the exporter’s pricing strategy. It has also a lot to do with exporter’s marketing objectives in the foreign markets. Different marketing objectives undoubtedly affect exporter’s pricing decisions.