Pricing, Terms of Sale, and Methods of Payment
Pricing Considerations
Pricing your product for sale in an international market involves many factors not contemplated in a domestic pricing decision.
Quotations and Pro Forma Invoices
Many export transactions, particularly initial export transactions, begin with the receipt of an inquiry from abroad that is followed by a request for a quotation. The preferred method for export is a pro forma invoice, which is a quotation prepared in invoice format.
Incoterms
The goal of Incoterms is to alleviate or reduce confusion over interpretations of shipping terms by outlining exactly who is obligated to take control of and/or insure goods at a particular point in the shipping process.
Methods of Payment
The method of payment chosen for an international transaction will be determined largely by the seller’s confidence in the buyer’s willingness and ability to pay.
Letters of Credit
A letter of credit, also referred to as a documentary credit, is a document issued by a financial institution which essentially acts as a guarantee of payment.