Pricing Yourself

As an international trader, you're an intermediary in the buying and selling, or importing and exporting, transaction. Therefore, you have to determine not just the price of the product, but the price of your services as well. These two figures are separate yet interactive. Because you're a swimmer in the trade channel, the price of your services has to be added on to the product price, and that can affect its competitiveness in the marketplace.

Since the fee for your services will impact the success of the product, you may ultimately decide to change your pricing structure. You don't want to undercharge your client so that you can't cover your expenses and make a profit, but you don't want to overcharge and reduce the competitiveness of your company and the merchandise you represent.

Import/export management companies use two basic methods to price their services: commission and retainer. Normally, you choose one method or the other based on how salable you feel the product is. If you think it's an easy sell, you'll want to work on the commission method. If you feel it's going to be an upstream swim, difficult to sell and require a lot of market research, you'll ask for a retainer.

A third method is to purchase the product outright and sell it abroad. This is a common scenario when you're dealing with manufacturers who would rather use you as a distributor than as a representative. You'll still market the product under the manufacturer's name, but your income will come from the profit generated by sales rather than by commission.

The Commish
Import/export management companies usually operate on a commission basis of about 10 percent. These fees are based on the product cost from the manufacturer.

Let's say you're working with English lawn chairs, which cost you $110 each. Here's what you do: First, take the price the manufacturer is charging for the product: $110. Now multiply $110 by 10 percent, which gives you a commission of $11 per chair.

So your product price at this point is $121 per chair ($110 + $11). To come up with the final price, you'll need to add other costs to this figure: any special marking or packaging, shipping, insurance and any representative or distributor commissions that you'll pay to others in the trade channel, which we'll go over a little later. Once you've arrived at a final price, you'll check it against your competitors' prices (you did do your market research, right?). If your product's price is comparatively low, you can bump up your commission percentage.

For now, however, you can see that for every chair you or your trade channelers sell, you'll get $11. If you sell a thousand chairs, that's $11,000 for you!