Analysis of international trade pricing principles and methods

In international trade, the principles and methods of commodity pricing are important guarantees for the smooth conduct of transactions. In this field, it is particularly necessary to follow the principles of equality and mutual benefit and to set reasonable prices based on factors such as international market prices, national policies, and purchase and sale intentions.

Principles of international trade pricing

1. Based on international market prices
   When setting prices for import and export commodities, prices in the international market must be referenced. These prices typically include:

   • The transaction price of commodities in international distribution markets, such as cotton in New York, tea in London, and wheat in Chicago.
   • The import prices of commodities from major importing countries or regions.
   • Export prices of commodities from major exporting countries or regions. For products with no clear market price, you can refer to similar products or initially set prices based on market demand, and then gradually adjust them.

2. Pricing based on country and regional policies
   Under normal circumstances, goods should be priced according to international market prices. However, in order to cooperate with my country’s foreign policy, transaction prices in certain countries or regions can be adjusted appropriately, that is, they can be lower or higher than international price levels.

3. Price based on purchase and sale intentions
   Clarity of purchase and sale intentions is an important consideration when setting prices. For example, for important materials and equipment, effective negotiations must be conducted based on careful price comparisons to ensure early import, while for exported goods, a balance between price and quantity must be taken into consideration to achieve the goal of collecting more foreign exchange.

4. Consider cost factors
   When determining prices, we must actively link production or acquisition costs, pay attention to the economic benefits of foreign trade, and strengthen cost accounting for imported and exported goods.

5. The impact of price difference factors
   When pricing, you need to consider price differences such as quality, quantity, season, and region, as well as pay attention to delivery time, market sales habits, and consumer preferences.

Methods of international trade pricing

Pricing methods in international trade are mainly divided into two categories: fixed price and non-fixed price.

1. Fixed Price
   The fixed price is the price determined when the contract is signed. This price will not be adjusted regardless of subsequent changes in market conditions. Although this method is conducive to settlement, when the market fluctuates greatly, it may cause losses to one party and even affect the smooth performance of the contract.

2. Non-fixed price
   For commodities with long delivery times or large market fluctuations, in order to reduce risks, the following methods can be adopted:

   • Does not fix the price but stipulates the pricing method: The fixed price is not directly specified in the contract, but the pricing basis is agreed upon, for example, the calculation is based on the closing price of an exchange.
   • Tentative price: A tentative price can be specified in the contract, and the final price will be determined based on the prevailing market conditions when delivery is approaching.
   • Sliding Price: In large-scale machinery and equipment transactions, the contract can set a base price and describe adjustment methods to respond to changes in production costs.
   • Part of the price is fixed and part of the price is not fixed: In bulk transactions, the price of the near-term delivery part can be fixed, while the forward delivery part is not fixed to reduce risks.

By understanding and applying the above principles and methods, international trade participants can respond to market variability more flexibly and effectively, and achieve higher transaction efficiency and profits.