Export pricing and methods of payment

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Export pricing and methods of payment

  1. 1. EXPORT PRICING AND Presented byMETHODS OF PAYMENT group 3
  2. 2. DEFINATION OF PRICEPrice is the value of utility of goods and services expressed in terms of money.It is one of the important factors that determine the success of an export organization.International market being buyer market, the price quoted by an export should be reasonable and final.
  3. 3. FACTORS AFFECTING DETERMINATION OF EXPORT PRICE:a. Cost of the Productb. Competitionc. Elasticity of Demandd. Government Policiese. Incentives offered by the Governmentf. Frequency of purchaseg. Product Differentiation and Brand Imageh. Miscellaneous factors
  4. 4. IMPORTANCE OF EXPORT PRICINGa. Helps to achieve objectivesb. Increases probabilityc. Helps to penetrate the marketd. Helps to skim the creame. Helps to increase market sharef. Helps to develop brand loyaltyg. Helps to face competitionh. Reflects the quality of product
  5. 5. EXPORT PRICING STRATEGIESa. Skimming pricing strategiesb. Penetration pricing strategyc. Transfer pricingd. Marginal cost pricinge. Market oriented pricingf. Competitors pricing
  6. 6. EXPORT PRICING QUOTATIONSa. Five on board (FOB) quotationb. Cost and freight(C&F) quotationc. Cost Insurance and freight (CIF) quotation
  7. 7. CONDITIONS FOR REALIZATION OF EXPORT PAYMENTa. Payment in permitted currenciesb. Prevent Immobilization of foreign exchangec. Submission of shipping documentsd. Export full value of goodse. Authorized dealersf. Different form of payments
  8. 8. FACTORS AFFECTING EXPORT PAYMENT TERMSa. Nature of product.b. Creditworthiness of buyer.c. Exchange and import controls in importing country.d. Competitors credit terms.e. Economic situation in importers country.f. Sixe of export order.g. Financial position of the exporterh. Relation with the importer.
  9. 9. METHOD OF PAYMENTa. Payment in advance.b. Open account.c. Consignment stock payment.d. Documentary bills of exchange.e. Letter of credit.
  10. 10. ADVANTAGES OF LETTER OF CREDIT For Exporter For Importera. Avoids blockage of finance a. Better terms of tradeb. Prevents Bad Debts b. Timely Deliveryc. Fulfillment oh Import c. Overdraft Facility Regulation d. NO Blocking of Financed. Guarantee of Payment e. Good Relations &e. Avoids refusal by importer Protection for both Parties

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