Export Pricing & Quotations

Why export pricing differs from domestic pricing

Domestically, your price mostly covers production, overhead and margin, with delivery handled simply. In an export sale, the price can also carry export packaging, inland freight to a port, forwarder and documentation fees, ocean or air freight, cargo insurance and bank charges — depending on the trade term you quote.

The discipline is to build the price up from your cost base and then attach a term that states precisely where your cost responsibility ends. Guessing at an all-in delivered price without that buildup is how first-time exporters lose money on orders they were pleased to win.

Building the export price

1. 1

   Start with your real domestic cost

   Use a fully loaded cost per unit — production, overhead and required margin — not a discounted domestic list price. Export buyers negotiate, so leave the room you need.

2. 2

   Add the export-specific costs your term makes yours

   Under EXW you add almost nothing; under CIF you add main freight and insurance; under DAP you add nearly the whole journey. Price each leg from actual forwarder quotes rather than rules of thumb.

3. 3

   Add the costs that exist regardless of term

   Export-grade packaging, labeling for the destination, documentation, bank and payment charges, and a margin for currency movement between quote and payment.

4. 4

   Check the result against the buyer's landed cost

   Add the destination duty for your HS code and local taxes to your quoted price. That landed figure is what the buyer compares against competitors, so confirm it is competitive before you send the quote.

What a complete quotation states

• Product description, specifications and HS classification reference.
• Unit price, currency and the exact trade term with a named place — for example, FOB Port of Oakland, not just FOB.
• Quantity breaks, minimum order and packaging configuration.
• Lead time from order to readiness to ship, stated honestly.
• Payment terms and the method of payment you will accept.
• A validity period, typically 30 days, after which the quote must be refreshed.
• Any documents you will supply, so the buyer can confirm their customs and bank requirements are covered.

A proforma invoice is simply this quotation in invoice form. It is what the buyer uses to arrange payment, open a letter of credit or apply for import permission where required.

Common pricing mistakes

• Quoting a domestic price and absorbing freight you never costed.
• Omitting the named place from the trade term, which makes the price ambiguous.
• Forgetting bank and letter-of-credit charges, which can reach several percent of order value.
• Leaving a quote valid indefinitely while freight rates and exchange rates move.
• Discounting to win a first order at a price the relationship can never grow out of.