Pricing Structure 4 an Indian

Exporter
By Manas Sikarwar
Costing done 4 Shirts Packs
 Assumptions:-
Cost of 10 Shirts = 500*10 (Ex Work-
Domestic)
 = 5000 per Carton
 Poly packing cost = 10*10
 = 100 for 10 shirts
 Carton pack = 30*1
 = 30 per carton
Continued……
 Freight Charges for 40ft container =
3000$
 i.e. Felix toe Basis(UK) = 3000*47 =
141000
 Packing cost = 5% of total cost
 Ex work = 10% margin
 Packaging & Marking cost = 2%
 i.e. Marking on cases- packing details,
POD, Shipping mark, etc.
 Transportation on FOB basis = 5%
 External inspections = 0 (not specified)
Container to be filled on
CBU(Completely Built Up) basis -
Fittings feasible(Format)-
No. of carton in a Container-
10 10 10 10 10 10 10 10 10 10 10 10
Shirts SC SC SC SC SC SC SC SC SC SC SC
Carton
10 10 10 10 10 10 10 10 10 10 10 10
Shirts SC SC SC SC SC SC SC SC SC SC SC
Carton
10 10 10 10 10 10 10 10 10 10 10 10
Shirts SC SC SC SC SC SC SC SC SC SC SC
Carton
10 10 10 10 10 10 10 10 10 10 10 10
Shirts SC SC SC SC SC SC SC SC SC SC SC
Carton
10 10 10 10 10 10 10 10 10 10 10 10
Shirts SC SC SC SC SC SC SC SC SC SC SC
Carton
Costing:
1.No. of shirts = 10*60
 = 600*4
 = 2,400 shirts or 240
Cartons
Therefore, Ex-factory cost of the

shirts:
 = 240*5000
 = 12,00,000 /-


2. Manufacturer’s profit margin (5%)=

60,000 /-
 Serial 1+2 = Domestic ex factory cost
 = 12,00,000+60,000 =
12,60,000 /-


3. Additional export related costs:

a) Shirt Packing = 100*2400 = 2,40,000 /-
 Carton Packing = 30*240 = 7,200 /-
 Markings cost = 5*240 = 1,200 /-
c) Additional financial
expenses
1.Establishment of bid bonds, bank
guarantees in case of tenders =
0%
2.Bank’s charges for LC
advising/confirmation/negotiation/c
ollection (1%) = 12,600 /-
3.Claiming exemptions of excise duty =
0%
4.Recovery of duty draw back & other
applicable incentives(.25%) = 3150
/-
5.Export insurance premium(in case of
6.Cost of credit facility to the buyer, if any(1%)
on 30 days = 12,600 /-
7. Overseas warrantee, product liability coverage, if any
= 0%
8.Forward contract charges, if contemplated(0)
9.Local insurance premium from ex-factory to
FOB point(or any other term than ex-factory) [.2%] =
1,260 /-
10.Export duty, if any = Nil
Therefore total additional financial expenses

are:
 12600+3150+12600+12600+1260 = 42,210
/-
 4. Cost reductions:
 Excise & customs duty input recovery through
duty draw back(1%) = 12,600 /-
 EPCG benefits, if applicable = 0%
 Duty free import(1%) = 12,600 /-
 Income tax benefits on profit as applicable(.5%)
= 6,300 /-
 Lower cost of pre & post shipment finance(For
export)= 0%
 Any support received from Govt. = 0%
 Therefore total cost reduction =

12600+12600+6300
 = 31,500
 Serial 1+2+3-4 = 1260000+353610-31500 =
15,82,110 /-
5.Ocean/Air freight charges = 3000$ = 47*3000
 = 1,41,000/Container
 = 141000/2400 =
58.75/Shirt
 FOB price + Serial 5 = 659.2+58.75
 = 717.95/Shirt o n C & F b a sis
6.Transit insurance = 1% of C&F price
 = 7.18/Shirt
 C&F price + serial 6 = 717.95+7.18
 = 725.13/Shirt on
CIF price
7.Expenses at destination = 0%



So exporter will export consignment
THANK YOU
