When you can estimate costs and pricing, you'll be able to use your estimates of demand to perform a break-even calculation. You can then find out how many units of imported product you’d have to sell before realising a profit.
As well as the standard costs of marketing a product (sales costs, domestic logistics, advertising, etc.) imported products come with their own costs. These can include:
- custom brokerage fees
- customs duties and levies.
Unexpected costs in importing can be significant. If you miscalculate shipping costs or the value of the Australian dollar falls, you may find you have no margin at all. It's essential you drill down into every conceivable cost before you go any further.
The importance of astute pricing is the same as with any product. Pricing should be influenced by:
- target market price tolerance (the highest price people would be willing to pay)
- competitor pricing
- demand for the product
- how you want to position the product or your business in the marketplace. If you’re too hasty in discounting your product you’re less likely to be perceived as a provider of premium quality.
If you have an exclusive contract to retail or wholesale the imported product in Australia, you should consider charging a premium. You may also want to consider this if you believe others will find it hard to follow in your footsteps.