Export Knowhow

Different purchasing power and exchange rates: Tips for the right price strategy

International sales markets have advantages and disadvantages: the greater sales potential is generally offset by higher costs for sales, marketing and logistics. Local purchasing power and exchange rates can have a significant impact on the competitiveness of your offers, not only in the dollar and the Euro zone. What strategies exist to set the right price?

Banknotes in dollars, Euro and other currencies

Purchasing power parity serves as the basis for a fair international assessment of a value. The Swiss franc tends to be under permanent upward pressure against the US dollar and the Euro.

Positioning in the upper price segment

A Swiss supplier will generally position itself in the upper price segment in international markets. Due to their technological, utility and quality advantages, Swiss products and services are often very well received abroad, even if the pricing is often in the double-digit percentage range above the average of competitors.

Value for money is evaluated subjectively at the international level

This makes it all the more important to adjust pricing to each market, because cost-benefit ratios correspond to different subjective values in each market, each application and each target group. These in turn are determined by a large number of country-specific factors, including cultural factors.

Example: A typical Swiss engineering service is complete and very comprehensive, meaning that the product can satisfy a wider range of nascent requirements and solve tasks. Accordingly, it is priced in the higher range. In markets with a different cultural character, the demand for the same product may be much lower or the initial willingness to invest may be smaller. In such cases it can make sense to design the offer in a modular way, as an expandable basic model with fewer services. Or alternative financing models may be required (e.g. leasing instead of purchase). Agility and creativity in financing and pricing can thus contribute to competitive advantages.

Modular design and alternative financing models

In such cases it can make sense to design the offer in a modular way, as an expandable basic model with fewer services. Or alternative financing models may be required (e.g. leasing instead of purchase). Agility and creativity in financing and pricing can thus contribute to competitive advantages.

Initial recommendations for action

  • Examine the price points and mechanisms in each market carefully. How do your competitors approach pricing and for what service? What are the margin structures like?
  • Create price-differentiated offers (e.g. modules, design, services, sales channels) for different customer requirements in the market.

  • Communicate above all the utility value to the customer, not the characteristics of your offering. For which of your offering’s utility values are customers really willing to pay more, for which not?

Read in the following contribution how you can optimize cost structure and increase your efficiency abroad. Read the article here

The complete handbook on how to start exporting successfully can be found here:

“Export Compact” - Getting Started with Internationalization

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