Setting Price

1. Setting Price

2. Compute Exporter’s Selling PriceNelson, p. 31 Ex. 2-5 Manufacturer’s (Factory) Cost + Your Commission + Freight forwarder fee + Freight to port + Consular invoice (?) + Export packing/labeling + Foreign distributor/agent fee + Marine Insurance + Transportation Exporter’s Selling Price

3. Compute Your Selling Price(1 of 2)Nelson, p. 31 Ex. 2-5 + Manufacturer’s (Factory) Cost • Obtain from Exercise 8 + Your Commission • Typical commissions between 7% to 20% of manufacturer’s cost; typically the higher the price of the good, the lower the commission. • Assume 15% of manufacturer’s cost + Freight forwarder fee • Most forwarders charge a basic fee for their services and then add on other charges for expenses, e.g. faxes, telephone, documentation preparation • Assume $300 + Freight to port • Based on weight ___ and measure___ • Assume $500 + Consular invoice • Document required by some countries which allows clearance of shipment into that country • Assume $0

4. Compute Your Selling Price(2 of 2)Nelson, p. 31 Ex. 2-5 + Export packing/labeling • Assume $300 + Foreign distributor/agent fee • Typical commissions between 5 % and 20% • Assume 5% of manufacturer’s cost + Marine Insurance • Generally sold warehouse to warehouse (i.e. from sender’s factory to receiver’s platform • Based on value of the shipment charges (freight handling, etc.) plus 10% • E.g. Ocean cargo insurance costs about $.50 to $1.50 per $100 of invoice value • Assume $0. + Transportation to named destination • Select ocean ___air __ truck__ • Based on weight___ and measure____ • Assume $2,000 + TRC Terminal receiving charges or wharfage • Steamship line charges to load goods on board vessel • Assume $50 = Exporter’s Selling Price or Landed Cost (CIF)

5. For Most Common Incoterms

6. For Most Common Incoterms

7. Sample Exercise - Calculate Selling Price