How do you deal with pricing in a volatile exchange rate?

Question

How do you deal with pricing in a volatile exchange rate?

This question was asked as part of the ‘Beyond the EU: Opportunities in North America’ webinar. You can find a recording of the webinar here at:

http://opentoexport.com/webinars/beyond-the-eu-north-america/

Answer

Hi Jean

It depends on your global pricing strategy.
Since you are UK based i would have thought you are charging customers in sterling, based on what you think is the right asking price for your products based on their competitiveness. ie what would people pay for a beautifully designed mug. The price elasticity is something you would be able to gauge from your experience over the past 20 years. If you are selling to USA clients in sterling they are finding your products cheaper so you should be having some great sales at the moment.
If however because of exchange rates your costs are increasing then you end up having to make decisions on lowering your margin; increasing your prices; or reducing your costs. The latter can be done by negotiating or resourcing raw materials, longer production runs, or buying in bulk, or even reducing the size of your mugs or reducing the number of colours on the designs.
Gilio
http://exportadvisory.com/

Answer

Hi Jean

There are many ways to deal with the volatility of an exchange rate, although some economic fluctuations are totally unexpected.
The solutions range from increasing the volume of your purchases or discounting your products when the rate is in your interest, to adapting your production or the sourcing of your raw material. A financial solution can be a good solution too, by “stocking” money on local bank accounts or provisioning in your financial statement to protect your business in case of non-predicted fluctuation.
The objective being to avoid as much as possible to lower your margins.

Please feel free to contact me by email: p.boesinger@altios-international.com. I’d be pleased to discuss your project.

Best regards
Pierre Boesinger
ALTIOS UK

Answer

Hi Jean

There are many ways to deal with the volatility of an exchange rate, although some economic fluctuations are totally unexpected.
The solutions range from increasing the volume of your purchases or discounting your products when the rate is in your interest, to adapting your production or the sourcing of your raw material. A financial solution can be a good solution too, by “stocking” money on local bank accounts or provisioning in your financial statement to protect your business in case of non-predicted fluctuation.
The objective being to avoid as much as possible to lower your margins.

Please feel free to contact me by email: p.boesinger@altios-international.com. I’d be pleased to discuss your project.

Best regards
Pierre Boesinger
ALTIOS UK

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