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Chapter 11
Price of Commodity
商 品 的 价 格
Terms of price are the core terms in a contact. The content, which is related to buyers and sellers’ mutual vital interests and the feasibility of a transaction, is playing a great role in constituting other terms in the contact. Legitimately grasping the methods of pricing and reasonably establishing the terms of price have significance on fulfilling missions of importing and exporting and improving economic benefits.
Lesson 1 Pricing
Correctly Implement Pricing Principles
Before the price of import and export commodities is determined, these three principles should be followed:
1.Determine the appropriate price on the basis of international price combined with our purchasing intention:
International price is determined in the international market competition on the basis of the international value of commodity, which can be accepted by both sides and will be the objective basis of importing and exporting commodity.
2.Pricing should take into account other countries’ policies and regional rules in order to make the international trading conform to diplomacy.
3.Pricing should combine with purchasing intention.
The determined price can be slightly higher or lower than the international price.
Price Components of Export Commodities
Four Components
The price of export commodity is composed of four indispensable parts: Pricing Currency, Units of Measurement, Unit Value (Price), Trade Terms. For instance, USD100/MT CIF HAMBURG.
The international price fluctuates according to the supply and demand relation. Sometimes the price changes dramatically within a short time; therefore, it is necessary to be aware of the changes of the supply and demand relation and the trend of the international price fluctuation when setting the pricing strategies.
2.2 Components of FOB, CFR and CIF FOB、 CFR、CIF
Price of FOB=Purchase Cost + Domestic Cost + Net Profit
F
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