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Are the prices going to be viewed by the foreign government
as reasonable or exploitative?
As in the domestic market, the price at which a product or
service is sold directly determines a firm’s revenues. It is essential
that a firm’s market research includes an evaluation of all of the
variables that may affect the price range for the product or ser-
vice. If a firm’s price is too high, the product or service will not be
sold. If the price is too low, export activities may not be sufficiently
profitable or may create a net loss.
The traditional components for determining proper pricing are
costs, market demand, and competition. These categories are the
same for domestic and foreign sales and must be evaluated in view
of the firm’s objective in entering the foreign market. An analysis
of each component from an export perspective may result in export
prices that are different from domestic prices.
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