Assigment #2

(costing sheet +analysis)

PART 2 - COSTING SHEET Considerations

Strategic pricing is one of the most important factors in achieving financial success. Part
of setting a realistic export price, and therefore an appropriate profit margin, is to
examine production, delivery and distribution costs, competition, and market demand.
The cost of RISK MITIGATION should also be accounted for if you are going to take a
pro-active approach.
In this section students must demonstrate their understanding of the cost variables of
selected target market and other export-related expenses. The goal is to describe what
items would be included on a costing sheet. The below gives some guidance.

 currency exchange rates and fluctuations

 market research
 customer research and credit checks
 receivables/risk insurance
 business travel
 international postage, cable and telephone rates
 translation
 commissions, training charges and other costs involving foreign representatives
 consultants and freight forwarders
 product or service modification and special packaging

SAMPLE Costing Sheet

One of the advantages of this type of costing sheet is that exporters can determine the
cost of exporting in accordance with different Incoterms® rules. This will help exporters
prepare for negotiations with prospective importers.
www.tradeready.ca/2017/topics/researchdevelopment/use-export-costing-sheet-track-spending-
keep-business-profitable/
Pricing points to consider in Costing Sheet (actual cost
numbers are not required for this assignment)
Use this handy checklist to track your costs and develop your pricing strategy.
Marketing and promotion
 agent/distributor fees
  advertising, media relations
 travel
 communications
 materials (brochures, business cards)
 trade fairs and exhibitions
Production
 unit cost of manufacture
 product or service modification
 regulatory approval
 increased R&D costs
 labelling/packaging, including translation
 packing/marking
Documentation
 inspection
 certification
 document preparation
 cargo insurance
 freight forwarder's fees
Transportation
 lading and related charges
 carriage
 warehousing and storage
 insurance
Customs
 customs and other duties at port of entry
 customs brokerage fees
Financing
 costs of financing
 interest charges
 exchange rate fluctuations
 export credit insurance

Pricing strategy considerations (This is for reference in

analysis, use your textbook for guidance)
How will each market affect your pricing? Include product modifications, shipping, and insurance
in your calculations.
Refer to your market objectives when setting your price. For example, are you trying to
penetrate a new market? Looking for long-term market growth? Or pursuing an outlet for surplus
production?
You may have to tailor your marketing and pricing objectives to certain markets (e.g. developing
nations). There are several pricing strategies available:
  Static pricing – charging the same price to all customers
 Flexible pricing – adjusting prices for different types of customers
 Full cost-based pricing – covering both fixed and variable costs of the export sale
 Marginal cost – covering only the variable costs of production and exporting, while you
pay overhead and other fixed costs out of domestic sales
 Penetration pricing – keeping your price low to attract more customers, discourage
competitors and gain quick market share
 Price skimming – pricing the product high to make optimum profit among high-end
consumers while there is little competition
After you've determined your costs and chosen your pricing strategy, establish a competitive
price for your product or service that gives you an acceptable profit margin.
Reports with poor grammar, spelling or presentation aspects will have additional marks
deducted. This assignment must use APA or Harvard citation and reference methods.
Presentation and referencing will impact your mark. Additional information regarding citing and
referencing is also available on the library web page. Report that contains plagiarism or are not
cited will receive a grade of zero.