Pricing your products for export - a guide

There are two common methods for determining pricing on physical products: cost plus
and top down.

This pricing template is designed to help you work out your export pricing by
considering these two approaches in parallel. We recommend doing both calculations
(both the top down template and the cost plus template) all the way through separately,
then comparing the results.

Ultimately, it should help you to spot all of the costs and barriers that need to be part of
your pricing, and identify any costs you need to manage or reduce so that you can
charge an acceptable price and still turn a profit.

You may not need all of the steps (in either of the templates) and you may need to
estimate many of the values used for your calculations. The process can be refined as
you learn more about the market and distribution of delivery costs.
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TOP DOWN PRICING TEMPLATE

In a top down pricing strategy, you start with the price that you want to charge your end customer (based on your
research in the market), then subtract costs backwards from that price until you reach your factory price. Follow
this table through from top to bottom.

The numbers currently in the table (under the grey columns) are examples only. You should always carefully
research mark-ups that apply in your target market.

ESTIMATED
EXAMPLE
STEP ITEM MARK-UPS OR YOUR COSTINGNOTES
(UNIT COST)
UNIT RATES

Retail Price $60.00

1
Retail mark-up e.g. 40%

Wholesale Price $42.86

2a
Wholesale mark-up and / or e.g. 25%
Distributor price $34.29
2b
Distributor’s mark-up and / or e.g. 15%
Agent’s price $29.82
2c
Agent’s commission e.g. 8%

Landed price $27.62

Landing charges Est.1.5% 0.85

3 Tariffs / duties (Real rate) $2.65

Customs clearning charges Estimated 0.30
Handing and delivery charges (actual or estimated) Estimated 0.15

Market currency $23.62

4
Foreign currency at exchange rate Day's rate
Cost, Insurance and freight (CIF)
5 NZ$ $33.74
Insurance costs - based on value Estimated 0.35
Cost and freight (C&F) $33.39

6 Freight costs Unit rate $5.75

Contingencies Estimated 0.50

Free on board (FOB) NZ$ $27.14

Export expense allocation (as per budget) Allowance $1.00
Export packaging Estimated $1.50

Documentation 0.65
7
Bank charges including collection charges Estimated 0.20

Other finance costs (foreign exchange charges) Estimated 0.15

Freight handling (factory to ship or aircraft) $2.20

Trade indemnity insurance, export credit insurance 0.10

Ex factory cost $21.34

8
Profit margin or mark-up $8.00
Total factory cost $13.34

Materials $2.80
Direct labour $7.25
9
Fixed $1.35
Variable overhead costs 0.84
Consumerables $1.10

Disclaimer: This tool is only intended as a general guide. We recommend you seek independent professional advice on any matter related to the specific use of
the tool for your company.
COST PLUS PRICING TEMPLATE

Cost plus pricing simply means adding up all your costs, from the factory to the export
customer, and then adding a mark-up percentage (your profit margin) to get your final
price.

In this table, start with your factory price, then add on each cost involved in packaging,
documentation, freight, and so on, until the product reaches the end customer.

UNIT OR
STEP ITEM ACTUAL
RATE

1 Ex-factory – wholesale price (includes your profit)

2 Export packaging (inner and outer)

3 Documentation (customs agency / freight forwarder)

Bank charges (forward exchange, payment arrangements,

4
letters of credit, bank drafts, hedging, credit insurance)

5 Freight to ship or aircraft

6 Handling charges and contingencies

7 Sub-total Free on board (FOB) NZ$

7.1 FOB foreign $

8 Marine insurance (sea or air)

9 Freight costs

10 Sub-total Cost, insurance and freight (CIF) NZ$

10.1 CIF foreign $

11 Landing charges

12 Customs duties and taxes

13 Clearance charges (customs agency / freight forwarding)

14 Inland handling and delivery charges

15 Contingency (such as fumigation)

16 Sub-total Delivered duty paid (DDP) NZ$

16.1 DDP foreign $

17 Delivered to buyer TOTAL