Lesson 1 Price

By Daniel Thompson,2014-04-07 19:16
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Lesson 1 Price

Unit 1.Price

I. Basic knowledge of pricing

    1.Cost structure: cost of production, selling and delivery costs, taxes and tariffs.

    a. Cost of production

    ? Costs related to the product manufacture: labor, raw materials,

    component parts, salaries, heating & lighting, general maintenance of

    the factory building and plant.

    ? Other ancillary costs directly allocated to the product:

    warehousing/storage, distribution involving inter-factory transfer

    handling, assembly costs.

    b. Selling and delivery costs

    ? Fixed costs: salesmans salaries

    ? Variable costs: packaging, transport, commissions, advertising and sales

    trip expenses, insurance premium.

    c. Customs duties: other costs factors taken into account by the exporter.

2. Points to be considered in pricing: be acceptable to the customers;

    generate enough revenue to cover all its costs. a. International market level: relevant market data on competitive prices

    for similar products

    b. Policies and regulations: those applying to a particular market area

    c. Exporters' purpose and importers' requirements:

    d. Supply and demand relationship: the world market may fluctuate (rising

    or falling of the market prices) with the change of it. e. Others:

    ? Adequate profit margin over your actual costs

? Details of the contract: quality and quantity of the products,

    transportation costs, place and terms of delivery etc.

    ? Method of payment and fluctuations of foreign exchange rates

3. Approaches to pricing strategies

    ? Based on price range: high, low and moderate

    ? Based on market areas: ethnocentric, polycentric and geocentric pricing

    Cost-oriented pricing methods以成本为导向的定价法

    a. Break-even pricing损益两平定价法: a method of determining the quantity of sales where the firms revenues will equal its costs. b. Cost-plus pricing成本加成定价法: a method of adding to a basic cost

    figure, an amount to cover profit and other unassigned costs.

    c. Marginal cost pricing边际成本定价法: a method of calculating the

    extra production costs involved.

II. Terms:


    noun: skimming price/loaded price/market price/competitive price/cost

    price/basic price/invoice price

    verb: go up/mark up/increase/rise/advance/raise/improve/lift/come

    down/mark down/drop/fall/decline/cut down/reduce/bring down

    adj.: reasonable/practicable/popular/on the low side/in line with the market

    level/workable/attractive/low/high/on the high side/out of line with the

    market level


    make a profit/gain profit/net profit/total profit/profit after tax/profit before

    tax/profit margin/profit ratio/average rate of profit/to reap fabulous profit/

    quick profits(easy profits)

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