What is an international price quotation?

Price quotation is a type of agreement. If there is any violation of this then the buyer can claim compensation. Therefore, an exporter should be very cautious while quoting international prices. The following factors generally influence the export price quotation:

(1) Basis of export price quotation – There are various bases of export price quotation; Like- from Ex-Factory/Godown Price to Franco Price but generally it is found that the importer uses C. & F. or C.I.F. The reason why we prefer price is that the exporter will be responsible for loading the goods on the ship and at the same time the exporter will also be responsible for unloading the goods at the importer's port. This saves the importer from various troubles.

: 2) Change in the exchange rate – If there is any significant change in the foreign currency exchange rate, there may be a reduction in the value that the Indian exporter gets in rupee terms. This type of risk can also be reduced.

(3) Packing of export goods – Sometimes the importer himself tells what type of packing the goods will be, but if he does not do so then it will be the duty of the exporter to do such packing which will prevent the goods from getting damaged in transit. Don't let it happen.

(4) Guarantee Generally an exporter gives a guarantee in the price quotation on the basis of his past experience. If the importer insists for the inclusion of any particular item in the guarantee, the price quotation should be given to the exporter taking into account the expenses incurred on the same.

(5) Spare parts: When machinery is being sent abroad, some spare parts are required to keep the machinery running properly. These parts are sometimes shipped along with the machinery for which no price is charged. The price quote should also take into account such free delivery. Sometimes the importer wants to continue to be supplied with spare parts even later. Therefore, this provision should also be made in the price quotation, only then the future prices will be justified.

(6) Price change formula - In foreign trade, there is a huge difference between the time of giving price quotation and the time of completing the contract, which can be for months. In such a situation it is natural for prices to change. Therefore, there must be a provision in the agreement that if there is a change in the prices, a proportionate change in the price quotation will be considered, but the importer is generally not ready to accept this. When the price change formula is given in the agreement it is assumed that no consideration will be given to the change in fixed cost. But the cost of labor and raw materials will definitely be taken into account.

(7) Penalty: There should be a provision in the international price quotation that if the seller deviates from his terms, he will pay compensation to the buyer. This compensation is usually based on a percentage that is charged on the total value. While doing so, an exporter should also specify the maximum amount of penalty so as to limit his liability.

What are the contents of the price quotation?

An exporter requires the following data before giving an international price quotation:

(1) Commodity-related information – This includes production cost and distribution cost – production cost includes initial cost, factory overheads and general management overheads, packing cost, transportation and insurance cost, and distribution cost.

(2) Market-related information – In this, market-related information is collected;

Like- (i) What type of market is there – high competition, low competition or low competition,

(ii) Characteristics of the market i.e. whether the market is developed or developing,

iii) What is the price in the foreign market?

(iv) Payment terms of competing institutions,

(v) Import duty and other quota restrictions,

(vi) What is the main source of supply in the importing country?

(vii) Volume of production and imports in the importing country.

(3) Notices for citation-

(i) In which currency the quotation is to be given,

(ii) Discounts like cash discounts, trade discounts,

(iii) What type of quotation is to be given F.O.B. or any other,

(iv) Terms of payment like D/P or D/A.

(4) Other conditions of sale-such as

(i) Who will pay for the export packing,

(ii) If the sale is being made through an intermediary then adding his commission,

(iii) whether the goods will go together or at times,

(iv) Shipping freight will be paid or paid by the buyer on arrival of the goods,

(v) Who will arrange for shipping company and insurance?

(vi) On what date will the goods be delivered?

what are the Types of International Price Quotation?

When there is an opportunity for an international price quotation, then according to business tradition, some words are used in the price quotation which has their own importance. These words are as follows-

Local Price – Local price means the cost of goods to the exporter. It does not include any other expenditure. This price is the value of the goods lying in his warehouse. This means that at this price the foreign buyer can purchase the goods from the exporter's warehouse. He will have to bear all the remaining expenses.

(2) Onboard price – This means that while quoting the goods, all the expenses incurred till loading the goods on the ship have been included in it. In addition to the local price, this includes the expense of packing the goods, cart freight, internal transportation expense, export tax, postage expense, and expense of loading the goods in the ship.

(3) Near ship value - This value means that it includes the expenses of transporting the goods from the warehouse or factory to the ship, i.e. the cost of the goods, carriage or cart freight, rail or truck freight, and the expenses of transportation to the port are included in it. Have been incurred, but the expenses of loading the ship are not included in this.

4) Price including cost and freight - This price means that it includes all the expenses incurred by an exporter in delivering the goods to the port of the foreign buyer and the price of the goods, i.e. it includes the cost of the goods, car, truck or rail. The freight includes the freight for transportation to the port, wages for loading the ship, and ship fare. Thus F.O.B. If shipping fare is added to the price then that price becomes C. & F. price. An insurance premium is not included in this price.

(5) Freight, insured value - This means that while quoting the goods to the foreign buyer, the exporter has also included the freight and insurance expenses of sending the goods at its price. In this type of quotation, the cost of the exporter's goods includes the expense of packing the goods, the expense of internal transportation in reaching the goods from the manufacturer's warehouse to the exporter's port, cart freight, postage expenses, loading expenses on the ship, the cost of delivery of the goods to the buyer. Includes shipping charges and marine insurance to reach the port.

6 Cost-Insurance-Freight and Commission Price - This type of price means that if any commission is payable to a broker for the export of goods, then it is also included in it. Thus in this price C.I.F. Price and commission payable are included.

(7) Price including cost – insurance, freight, and exchange – the exporter of the exporting country gets payment by converting the currencies of the two countries into foreign currency exchange rates. This rate keeps changing from time to time. If C.I.F. The price also includes the value of exchange rate risk, so this price is C.I.F. & E. is called value.

(8) Ex-shipment price – This means that while quoting the price, the exporter or seller has included all the expenses incurred in getting the goods from his port to the importer's port. After the goods reach there, it is the responsibility of the buyer to take delivery. Therefore, all expenses incurred after taking delivery will be borne by the buyer.

(9) Restricted warehouse value - This value includes all the expenses and price of the goods to deliver the goods to the restricted warehouse at the buyer's port. If we add to the ex-ship price the expenses of unloading the goods at the buyer's port and the expenses of keeping the goods in a restricted warehouse, then the restricted warehouse price is arrived at.

(10) Import tax paid price - This means that the exporter or seller has also included in the price quotation the amount of import tax imposed on the import of that item by the government of the buyer's country. All expenses till import are borne by the exporter. Subsequent expenses will have to be borne by the buyer

.11) All-Free Price – This type of quotation means that the exporter has included all the expenses for the goods to be exported to reach the buyer's warehouse. This type of price quotation is often used by exporters while doing business with neighboring countries. In this, all the expenses are borne by the exporter. Price of goods, the expense of packing of goods, the expense of internal transportation, export tax, postage expense, the expense of loading the goods on the ship, shipping fare, marine insurance, the expense of unloading the goods at the buyer's port, postage expense of the port of the importing country. , Import tax, the expense of transporting the goods from the importer's port to the buyer's railway station, the expense of transporting the goods from the railway station to the buyer's warehouse, the amount of taxes payable to the local authority are all included in the price of the goods.

12 Rate of Exchange What is the current rate of currency of importer and exporter, which is worth mentioning.

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