Growing Global Brands: How to Develop Pricing Strategies for International Customers

Pricing for your export customers is critical to success in the global markets. It also avoids price competition with U.S. trading companies, parallel exporters and distributors such as UNFI, KeHe and Supervalu.

There are three main types of pricing available to U.S. exporters:

U.S. Distributor Pricing
Discounted U.S. Distributor Pricing
Marginal Pricing

We believe that the first, U.S. Distributor Pricing, is not only ineffective but also contributes to ignorance, downward pricing and poor brand management of the U.S. exporter. In this case, the exporter cedes all control and stewardship of the brand. The exporter has no knowledge of what countries are importing the brand, the retailers which are displaying the brand, nor the manner in which the brand is merchandised on the retail shelves.

The second method, slightly less than U.S. Distributor Pricing with commensurate marketing support, is the preferred export pricing method. This prevents price competition with U.S. exporters such as UNFI, allows sufficient profit margins for the exporter, and compensates the international customer for the high transportation costs and other import duties and taxes.

The final method, marginal pricing, is pricing which simply removes the exporter’s fixed costs in the pricing offered to the international customer. This method assumes that the exporter has built in fixed costs and overheads to their U.S. pricing. Exports simply become an incremental sale to their business and all margins fall to the bottom line. This pricing method allows for maximum sales volume due to the lower price, and increases the top line of the U.S. exporter, while providing adequate profit margins.

With any export pricing model, we also recommend providing your export customers with adequate marketing support. This support should be incorporated within the pricing offered. This marketing support may be used for sampling, retail displays, retailer-specific flyers, or local trade shows. It will also enhance your relationship with your export customers and put more focus on your brand than others within your customer’s portfolio. Overall, a winning strategy!