When products are transported across national borders, tariffs may have to be paidĪ variety of local taxes also affect the final cost of products and different national taxes contribute to the different prices charged in different national marketsĮxample: Sin Taxes. Zara prices in the US can be 65% higher than they are in Spain But with the distribution centred in Spain, prices increase the further a store is from the home base. Zara is known for responding quickly to fashion trends and for delivering new stock quickly to its foreign operations. Many companies that charge higher prices in foreign markets than in domestic markets do so because of costs of shipping and transportation.Įxample: ZARA. There are three key factors that affect pricing policies in an international environment.Īre often shipped over long distances. Managing global pricing is more complex than establishing national pricing strategies. Read: Framework detailing the formation of consumer price perception, proposed by Mendoza and Baines (2012) Total revenue = volume sold x unit price. Need to cover costs and make long term profits.Variable costs – depend on the number of units of goods made or services sold.Fixed costs – don’t vary according to the number of units of goods made or services sold.Need to understand what the offering costs the company to make, produce or buy.
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