Cost-oriented pricing is a method of setting prices based on the cost of marketing products. This is a relatively simple and widely used pricing method. Cost-oriented pricing can be divided into the following two types:
1. Cost-plus pricing
Cost-plus pricing refers to setting the sales price by adding a certain percentage of gross profit to the unit cost of the product. The calculation formula is:
P=cx(1+r)
P–unit price of the product.
c–unit total cost of the product.
r-markup rate of the product.
[Data reading] Example of cost-plus pricing
You own a cross-border e-commerce clothing store. How to calculate the selling price of a shirt? It costs $11.5 to purchase a shirt and print the pattern; the average shipping cost of this shirt is $3, so the cost of the shirt is $14.5; and you want to make a profit of $10.5 on each shirt sold, so the price of the shirt should be $25.
If your store has a new T-shirt, this T-shirt needs an additional printing fee of $15, plus an average shipping fee of $3, the price of the T-shirt should be $28.5, which is $18 product cost plus $10.5 profit.
Of course, you can also use the percentage calculation method to calculate the price, that is, add the expected profit margin to the product cost to calculate the price.
The disadvantages of cross-border e-commerce sellers using cost pricing are also very obvious. When sellers have a unified price for all consumers and all markets, first, sales cannot be guaranteed. If the price is too different from the market price level, the sales model of cross-border e-commerce will make it impossible for consumers to see the real thing. Low pricing is likely to make consumers unable to believe in the quality of the product, and the price advantage will directly become a competitive disadvantage; second, if competitors reduce prices, and they still maintain the original price, it will affect product sales. If sellers do not make timely adjustments to market reactions, sales will inevitably be affected.
2. Expected profit pricing method Expected profit is the long-term average profit value. The profit level included in the price is generally determined by the product, industry, market demand and the cross-border e-commerce seller strategy of the enterprise. Therefore, it does not have a certain standard and is often determined by the cross-border e-commerce seller. In practice, cross-border e-commerce sellers use a fixed percentage of the export cost or transaction price as the expected profit based on past experience.
[Data reading] Example of expected profit pricing method
Each packaged children’s windbreaker weighs 1200g, the purchase cost is 39 yuan, the domestic postage is 10 yuan, the shipping destination is the United States, and the expected profit is 10% of the product price. The international tariff standard is: first weight 50g: 9 yuan/piece (first weight 50g, less than 50g is calculated as 50g); additional weight: 1~200g: 0.08 yuan/g; 201~2 000 g: 0.075 yuan/g. The exchange rate is 1 USD = 6.7 RMB. What is the price of the product? (Keep two decimal places) Analysis: Product price = cost + expected profit = purchase cost + domestic postage + international shipping + expected profit Let the product price be Y, then Y = 39 + 10 + () + Y x 0.1 In the above formula, international shipping is an unknown quantity and needs to be calculated. International shipping is: (1) First weight price: 9 RMB (2) 1~200g: 200×0.08=16 (RMB) (3) (1200-50-200)x0.075=71.25 (RMB) Therefore, the international shipping cost of a children’s windbreaker = 9 + 16 + 71.25 = 96.25 (RMB). Substitute the international shipping price into the formula:
Y=39 +10+96.25+Yx0.1
0.9Y=145.25 Y≈161.39
1 USD=6.7 RMBY≈24.09 USD
That is, the price of a children’s windbreaker is 24.09 USD.