Export-Import Management (520135)

Chapter 04: Pricing

Lecture: 13

Conducted By :
Lata Akter
Lecturer
Department of Business Administration
Dhaka City College
 Topics to be discussed….
 Specimen of Price Quotation
 Ways of price negotiation
 Elements of Export Costing
 Product Classification for Export Pricing
 Methods of Payment
 Enquiry
 Unsolicited Enquiry
 Buyers Preferences for Price
 Elements of Export Costing
1. Export price Based on Marginal Costs:  Bank charges
 Direct material  Inland freight
 Direct labor  Forwarding charges
 Other Direct costs  Inland insurance
 Variable production overhead  Port charges
 Variable administrative overheads (for  Export duties, if any
example, salary of export clerk)  Warehousing at port, if required
 Other Variables costs  Documentation and incidentals
 Others costs directly related to exports:  Interest on funds involved/cost of deferred
Selling costs – advising support to importers credit
abroad  Cost of after sales service including free
 Special packing, labeling etc parts supply
 Commission to overseas agent  Consular fees
 Export credit insurance  Pre shipment inspection and loss on rejects
 Elements of Export Costing
2. Export price Based on Full Costs:
 Direct costs as in (1) above
 Feed costs/common costs
 Production overheads
 Administration overheads
 Publicity and advertising (general)
F.O.B price (based on full cost)
Freight (volume or weight whichever is higher)
Insurance
 Product Classification for Export Pricing
 The Harmonized System Classification is a standardized numerical method of classifying
traded products. It is used by customs authorities around the world to identify products when
assessing duties and taxes and for gathering statistics.
 The HS is administrated by the World Customs Organization (WCO) and is updated every
five years. It serves as the foundation for the import and export classification system.
 The HS assigns specific six-digit codes for varying classifications and
commodities. Countries are allowed to add longer codes to the first six digits for
further classification.
 The United States uses a 10-digit code to classify products for export, known as a Schedule
B number, with the first six digits being the HS number. There is a Schedule B number for
every physical product, from paperclips to airplanes. The Schedule B is administered by the
U.S. Census Bureau’s Foreign Trade Division.
 Product Classification for Export Pricing

Exporters need to know their product classification, i.e., Schedule B and HS Numbers for
many reasons including
 Classify physical goods for shipment to a foreign country;
 Complete required shipping documentation such as shipper’s letter of instructions,
commercial invoice or certificate of origin;
 Determine import tariff (duty) rates and figure out if a product qualifies for a preferential
tariff under a free trade agreement;
 Conduct market research and obtain trade statistics;
 Comply with law, where applicable.
Methods of Payment
1. Cash in Advance
2. Letter of Credit
3. Drafts-similar to a Personal Check
4. Documentary Collection
5. Bankers acceptance
6. Open Account
7. Consignment Selling
Thank You