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Pricing

Pricing. Pricing Terms. Free on Board (FOB) Cost, Insurance, and Freight (CIF) Cost and Freight (C&F). Sequence of Pricing. Factory (FOB, ex-Factory in ….) Port of Export (FOB, ex-Port in ….) Port of Import (CIF, ex-Port in …) Buyer’s Warehouse (Landed Cost). Landed Cost.

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Pricing

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  1. Pricing

  2. Pricing Terms • Free on Board (FOB) • Cost, Insurance, and Freight (CIF) • Cost and Freight (C&F)

  3. Sequence of Pricing Factory (FOB, ex-Factory in ….) Port of Export (FOB, ex-Port in ….) Port of Import (CIF, ex-Port in …) Buyer’s Warehouse (Landed Cost)

  4. Landed Cost The ultimate cost to the buyer. Purchase price of the product Shipping & Handling (Local & Overseas) Insurance Customs duties & Clearance fee Other taxes, if any Inspection and Payment costs. Installation and Assembly costs, if any.

  5. Cost-Escalation Factors • Transportation Cost • Taxes & Tariffs • Middlemen Cost • Inventory Cost • Inflation • Exchange Rate Fluctuation • Government Regulation

  6. Pricing Considerations • Price Goals (premium or low price) • The cost of Marketing • The cost of Distribution • The Margins

  7. Approaches to Reducing Cost-Escalation • Lower Import Prices to save Tariffs • Import Parts and Assemble Locally • Produce Locally • Avoid Costly Functional Features • Remove Middlemen??

  8. Transfer Cost Intra-company price Can be set in such a manner as to take advantage of differing income taxes in two countries. Accumulate profits in a lower-tax country

  9. Beware Transfer price should be: Market-based, when available. Else, cost + overheads + fair margins

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