What's It Worth?
One of the most difficult aspects of taking your business international is pricing products. According to Marcia Youel Smith, president of Reston, Virginia-based Columbia Cascade Inc., which produces software used by associations, educators and government agencies to calculate export pricing, international pricing is a two-step process.
First, find a base price that takes into account the additional expenses you incur just by crossing borders. These include:
- international market research;
- export distribution fees and sales commissions;
- international advertising and marketing;
- product modifications to comply with international standards;
- packaging that meets export requirements;
- and export consulting, accounting and legal fees.
Then, once you have a specific international customer to quote for, you have to consider the costs particular to getting your goods to that company, such as:
- shipping and handling (packing, marking, labeling, consolidating and containerizing);
- preparing export documents, certifications and licenses;
- compiling export shipment documents;
- insurance certifications and policies;
- dangerous/hazardous materials declarations and certifications;
- and freight-forwarder, consignee, customhouse-broker and/or consulate fees.
"Pricing can be a confusing task," Smith concedes, "but you get better at it once you're familiar with all the factors."
Christopher D. Lancette is an Atlanta-area freelance journalist who covers international business fora variety of local, national and international publications.
Forget the library. You'll want to have these at home.
If you're looking for fireside reading, these probably won't do, but if you're looking for global expansion...
- Start and Run a Profitable Exporting Business (Self-Counsel Press), by Laurel J. Delaney. This easy-to-read primer walks you through the world of international business.
- World Boom Ahead (Kiplinger Books), by Knight Kiplinger. The editor of The Kiplinger Letter sees good times ahead in the global marketplace. The chapters on major global trends, expanding world markets and outlooks for key industries are particularly useful.
- The Financial Times (http://www.ft.com). With the staff of The Financial Times at your service, you can turn today's business news into tomor-row's profits. And don't overlook the archives when you need top-notch research.
- And of course, our own How to Start an Import/Export Business, available at http://www.entrepreneur.com.
Name and age: Rick Goodwin, 40
Company name and description: General Creation International Ltd., based in Bristol, Tennessee, creates educational toys.
Starting Point: $0 in 1995
1999 Sales Projections: $30 million
In the corporate world: Goodwin bought and designed toys for those arcade games where players use a crane to pick up prizes.
What's the big idea? "I started inventing my own toys [in 1994]. One was a bear that reacted to the sound of a smoke detector. [Big toy companies] said it crossed too many boundaries--too useful for a toy, too playful for a safety device."
Bye, bye, American toy: Deciding he would have to go directly to retailers, Goodwin found a partner, Billy H.C. Hung, and teamed up with four factories and an electronics company willing to take a risk. Goodwin knew, however, that it was impossible for a small company to break into the $21 billion U.S. toy market, so he launched Thermy Teddy (part bear, part electric blanket) in Germany through a European distributor.
Transition and translation: Continuing his theme of multitalented bears doing more than sitting around stuffed, Goodwin decided to focus on educational toys, particularly teddy bears with embedded microchips that allow the bears to help kids with reading, math and other tasks. His first educational toy, Baby Bear, brought in $1.5 million.
No hibernation: Goodwin quickly went on to create a full line of toys in seven languages and use his international success to enter the U.S. market. The United States now accounts for 50 percent of his sales.
Columbia Cascade Inc., (703) 860-0866, http://www.columbiacascade.com
General Creation International Ltd., (800) 323-8100
Toy Manufacturers of America, (212) 675-1141