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    Nhi Thanh Lê
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    The chapter discusses export pricing, including defining standard price terms like FOB and CIF. It covers factors to consider when setting a price like costs, competition and the target market. Methods for calculating price are presented, such as cost-plus pricing and marginal cost pricing. The document also explains terms like commissions, discounts, and price adjustment clauses. Finally, it outlines the stages of communicating a price to customers from initial inquiry to acceptance.

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    Chapter 3

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    The chapter discusses export pricing, including defining standard price terms like FOB and CIF. It covers factors to consider when setting a price like costs, competition and the target market. Methods for calculating price are presented, such as cost-plus pricing and marginal cost pricing. The document also explains terms like commissions, discounts, and price adjustment clauses. Finally, it outlines the stages of communicating a price to customers from initial inquiry to acceptance.

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    © All Rights Reserved
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    9 views21 pages

    Chapter 3

    Uploaded by

    Nhi Thanh Lê
    The chapter discusses export pricing, including defining standard price terms like FOB and CIF. It covers factors to consider when setting a price like costs, competition and the target market. Methods for calculating price are presented, such as cost-plus pricing and marginal cost pricing. The document also explains terms like commissions, discounts, and price adjustment clauses. Finally, it outlines the stages of communicating a price to customers from initial inquiry to acceptance.

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    of 21

    LOGO

    Chapter 3

    EXPORT PRICE

    29/07/2021 1
    Contents LOGO

    1 Expression of Export price

    2 Pricing Considerations

    3 Calculation of Price

    4 Understanding the Price

    5 Communication of Price

    29/07/2021 706026- Chapter 3: Export price 2


    Learning Outcomes LOGO

    1 State the standard form of a price quoted in IT

    2 Identify the major factors in pricing decision

    3 Calculate basic price

    29/07/2021 706026- Chapter 3: Export price 3


    Learning Outcomes LOGO

    4 Understand function & calculation of commission

    5
    1 Explain ratios used to interpret profitability
    5

    6
    1
    6 Define four stages of price communication

    29/07/2021 706026- Chapter 3: Export price 4


    Expression of Export Price LOGO

    A number indicating the price


    A unit for
    measuring
    quantity
    A code of
    currency
    Component

    A certain trade term

    29/07/2021 706026- Chapter 3: Export price 5


    Pricing Consideration LOGO

    Cost

    Anticipated Profit

    Others

    Capability of Target market


    Terms of Payment

    29/07/2021 706026- Chapter 3: Export price 6


    Calculation of Price LOGO

    1 2 3 4

    Cost-Plus Marginal Buyer - Competition


    Pricing Cost Based - Based
    Pricing Approach Approach

    29/07/2021 706026- Chapter 3: Export price 7


    FOB LOGO

    FOB Free on board Sub-Total


    Factory purchasing cost
    + Administrative overhead
    + Profit margin
    + Local transport costs from plant to
    shipping port
    + Local transport insurance to shipping
    port (optional)
    + Storage costs, terminal handling
    charge (THC)
    + Export customs clearance costs
    = FOB (Named port of shipment)
    29/07/2021 706026- Chapter 3: Export price 8
    FOB LOGO

    FOB = (Total Cost + Profit)/Exchange Rate

    29/07/2021 706026- Chapter 3: Export price 9


    CFR LOGO

    CFR = FOB + Ocean Freight

    29/07/2021 706026- Chapter 3: Export price 10


    CIF LOGO

    CIF = FOB + Ocean Freight + Insurance

    CIF = CFR + Insurance

    Insurance Premium (I)= CIF x (1+10%) x


    Premium Rate

    CIF = CFR + CIFx(1+10%) x Premium Rate (R)

    CIF = CFR/ (1 - 110%xR)

    29/07/2021 706026- Chapter 3: Export price 11


    Pricing Including Commission LOGO

    Commission = Contract value x commission rate

    Pricing Including Commission = net price /


    (1 - Commission rate)

    29/07/2021 706026- Chapter 3: Export price 12


    Pricing with Discount LOGO

    Discount = Contract price x Discount rate

    Actual price = Contract price – discount


    = Contract price x (1- discount rate)

    29/07/2021 706026- Chapter 3: Export price 13


    Pricing Adjustment Clause LOGO

    P=P0 (A+BM/M0+ CW/W0)

    Actual price = Contract price – discount


    = Contract price x (1- discount rate)

    29/07/2021 706026- Chapter 3: Export price 14


    Understanding the price LOGO

    Export Profit Export cost for


    Margin= Foreign exchange =
    (Revenue –Cost)
    Revenue Cost in Local currency

    Revenue in Foreign
    Currency

    29/07/2021 706026- Chapter 3: Export price 15


    Communication of Price LOGO

    Inquiry Offer Counter Accept


    - offer ance

    29/07/2021 706026- Chapter 3: Export price 16


    Key terms LOGO

    vFirm offer vMaterial price index


    vFixed price vMoney of account
    vInitial price vMoney of payment
    vInquiry
    vIrrevocable offer

    29/07/2021 706026- Chapter 3: Export price 17


    Key terms LOGO

    vAcceptance vExport cost for foreign


    vCommission exchange
    vCounter –offer vExport profit margin
    vDiscount vFinal price

    29/07/2021 706026- Chapter 3: Export price 18


    Key terms LOGO

    vNet price vOfferor


    vNon-firm offer vPrice adjustment clause
    vOffer vPrice including commission
    vOfferee vQuotation

    29/07/2021 706026- Chapter 3: Export price 19


    Key terms LOGO

    vRebate vUnit price


    vRevocation of an offer vValidity period
    vTotal price vWage index
    vUnfixed price vWithdrawal of an offer

    29/07/2021 706026- Chapter 3: Export price 20


    LOGO

    Click to edit company slogan .

    29/07/2021 21

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