Export Pricing Objectives

An exporter’s pricing objectives have an important influence on its pricing strategy. If a firm prefers an aggressive expansion strategy into foreign markets, it may opt for a lower profit margin than it accepts for domestic sales. It will charge minimum prices in all markets to generate the highest volume of sales. This means that it will choose penetration pricing or cost-based pricing strategies to take high-volume, low-profit sales. Other export firms may prefer to achieve a high profit level by conveying an image of prestige and charge a high price in all markets. They could charge different prices based on what the market will bear. Such firms will opt for price skimming to take high-profit, low-volume sales. Between these two extremes, export firms use other pricing strategies such as marginal or competitive pricing (Figure 7.1).

Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.