9.Terms of price1-国际商务英语-大学课件.pptVIP

Chapter 9 Terms of Price 9.1 Expression of export price Four components in a standard format of a price: A code of currency: USD, CAD,CNY, EUR, GBP A number indicating the price unit A unit for measuring quantity: kg, gr, m/t, yd, set A certain trade term: FOB, CFR, CIF Examples: USD225.30/piece CIF New York FOB Guangzhou EUR12.80/set 9.1 Pricing elements Cost Structure Cost of production Direct cost: material costs, labour costs, allocation of fixed costs, packing costs, etc. Administrative costs: overhead Selling and Delivery costs Fixed costs: salesmen’s salaries Variable costs: packaging, transport, commissions, advertising and sales trip expense, insurance premium. Customs duties 9.1 Pricing considerations Anticipated profit margin in an absolute number in a percentage → profit margin Capability of target market Referring to the consumption power, income level, supply and demand relationship The higher the capital income of the target market, the higher the price Other factors to be considered foreign exchange rates international market price for similar products policies and regulations in a particular market area 9.2 Pricing Methods Cost-based Pricing A basic cost figure An amount to cover profit Other unassigned costs Target costing Target costing makes cost an input to the product development process, not an outcome of it. Japanese companies, Isuzu Motors, Sony Break-even Pricing BEP=Total Fixed Cost/Price of One unit-Variable Cost of One Unit Marginal Cost Pricing The variable costs per unit of production Direct cost + variable overheads 9.3 Calculation of price 9.3 Calculation of price 9.3.1 FOB Price FOB in freight currency FOB in freight currency = (Total Cost + Profit)/Exchange Rate 9.3.2 CFR Price If FOB price is available CFR = FOB + Ocean Freight Ocean freight Provided by shipping lines Quoted as packaged price Others like “additionals” and “surcharges” Conversion of FOB, CFR CIF Prices Conversion of FOB to other prices CFR = FOB + F