Do we need to work on our wholesale prices for an international trade fair?

Question

We are attending our first trade fair in a couple of months, seeking new export markets within the EU and outside the EU.

We currently have a Wholesale price including delivery within the EU. Do we need to work on new Wholesale prices to take account of tariffs and additional transport costs to export to South America (for example), or do we just quote our EU pricing as an ‘ex-works’ (excluding delivery, tariffs etc). Many thanks if you can help.

Answer

Hi Antony,
From a commercial point of view its very difficult to control your end consumer price for countries like Asia and Latin America. But it can be done and depends how much time you can afford to spend on doing it.
Ideally you would like your products to sell the same the world over, as Apple tries to impose.
In Brazil the import tariffs are so high that products can be nearly double the price they are selling at in neighbouring Chile. So whilst you would like to have a pan-LATAM strategy it would depend on whether you are prepared to give up more margin in some countries more than others.
Most companies i’ve worked with would use their export price list and let the distributor work out what it will cost to land it (including freight and duty and insurance etc )and then make their own pricing strategy locally.
You are right to try and get them to buy ex-works as this passes the ownership straight to them from when the goods are picked up. Though there will be many importers who ask for FOB/FCA. Probably depends on what the norm is in your sector.
Gilio
www.exportadvisory.com

Answer

Hi Gilio, a huge thanks for taking the time to help.

That is really useful. This is the first time we are exporting and we don’t have much experience in the sector we are entering but I suspect it is becoming clear that all these issues are up for negotiation with individual Distributors etc. I think we may end up stating our prices for European supplies and let any interested buyers sort their own customs and delivery arrangements in their own countries. At the end of the day those additional costs affect their retail price opposed to our Wholesale price (which does not have much space for movement).

It seems to me that we should offer delivery to the port/airport in the UK (country of manufacture) inclusive and they sort out the rest, they will be more experienced than us in their own sector. If they are not happy with that, they will no doubt say and we can ‘play’ with the Wholesale price a little, Unfortunately our product (sweets) won’t have any worldwide history or recognition to go on (like Orbit, Wrigleys, Mars etc) and as far as I can see the retail price of global confectionery varies country to country, but generally speaking imported products are more expensive to buy in overseas markets. I certainly experienced that in Central America this year (one of our target markets).

Thanks again, it was great to have your thoughts on the subject.

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