PayPal Stories Archive

 

Interested in selling your product overseas? Advantages abound: according to the International Trade Administration, businesses that export tend to see higher profits, better-paying jobs and faster job creation. Executed correctly, an export strategy can also help mitigate risk as access to international markets can reduce exposure to economic fluctuations. 

 

International markets have never been more accessible. But trading overseas requires planning and strategy. 

 

Among the many challenges of a strong export strategy, correctly pricing goods and services is perhaps the most important. How do you account for the complex variables of selling overseas? 

 

PayPal helps outline the top issues to consider when pricing for overseas markets.

 

Pricing for international markets starts with many of the same factors that go into domestic pricing. How is the item perceived – a commodity, or a differentiated product? What is the consumer perception of your product, and how will pricing affect that perception? Does the price reflect the true cost of the product, and is it sustainable? Is demand elastic? 

 

These questions are the foundation for any decision-making around costs, and basic market research is key. 

 

 

The financial viability of a product is highly dependent on local factors. Shipping and overseas distributors can quickly drive up costs compared with domestic sales operations. 

 

Additionally, regulatory actions can influence major swings in costs: foreign governments’ tariffs, customs fees, and other administrative overhead must be clearly evaluated to avoid surprises. Further, companies should firmly understand different countries’ anti-dumping laws and processes for determining whether pricing is exploitative. 

 

 

To calculate the market opportunity for consumer (and often B2B) goods and services, income demographics are crucial. The U.S. Department of Commerce recommends starting with per-capita income to determine the number of target customers. 

 

Other demographics such as household net worth and income by age and city can be crucial as well, particularly if your company is pursuing a highly-targeted audience, such as expats or specific high-income segments, that are outliers from the general population. 

 

Beyond income, global currency fluctuations can also make goods more or less affordable: a strong euro can mean European products are less competitive in the U.S., while a weak dollar can make U.S. products more attractive in Asia.

 

ProTip: Get country-by-country economic indicators from at WorldBank.org

 

When it comes to making the leap to international exports, the opportunity is too big to ignore: the global “middle class” is expected to reach 1.2 billion people by 2030, corresponding to an unprecedented jump in disposable income. In the U.S. alone, the value of goods and services exports reached a chart-topping $2.34 trillion in 2014.  

 

For B2C e-commerce sales alone, the global market is expected to hit $2.35 trillion by 2018. In companies worldwide, the question is not whether to implement an international sales strategy, but how to do it.