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May 9, 2009 at 11:56 am #964757Up::0
Hi business gurus,
let me start by apologising for asking what may seem a completely stupid question, but accounting and i simply dont mix. I’m close to handing this over to an expert bean counter, but i’d like to be able to do it myself and have some peace of mind. I would be ever so grateful if someone could set me straight on this, because it’s doing my head in as i try to establish a price list on products.
The scenario:
Im going to be importing some products from the US and reselling them here in Aus. The supplier is giving me 25% off the RRP.
I need to make my price competitive so that the customer doesnt just buy from the US supplier at RRP. Naturally i want to retain as much profit as possible.
Can someone please outline for me, in simple terms, what i should be charging my Aus customer?
Ive been trying to work out what the customer would be charged if they bought the product from the US with their credit card and had it shipped to their door. Because my price would need to be below that, so that im the more attractive local purchasing option (yes?).
Im not sure what Mastercard and VISA charge as International Transaction Fees (1%?), and what exchange rate the banks use at time of purchase. GST is a whole new can of worms. I guess i would be getting charged 10% GST when the goods get into the country and then charging the customer 10% GST? Are there any other fees for bringing the stuff (photographic equipment) into the country?
Could someone please run me through an example for a product that costs me $172.46 US Dollars (and $229.95 US for the customer)? Postage is $53US for the single item.
Obviously, ill be bringing the products into the country in larger shipments (in the range of $5000 – $10,000 per shippment), so i guess i would save on some shipping there, but im looking at worst case scenario per single item.
Do i keep my prices fixed regardless of the US/AUS exchange rate? Do i just factor an average of .70c to the US dollar and absorb the costs? Do i pass the online merchant fees onto the client (invisibly)?
Ultimately, i want to know what my margins are so that i can set the price accordingly and still remain competitive.
Again, im sorry if these are silly questions. This is a first time for me and hence, why ive come here. If you can, please advise me (in the simplest possible terms). I would be forever in your debt
Kind regards,
Skiman
May 10, 2009 at 12:16 am #1007850Up::0So heres what I did.. I have an online store here in the US and many of my manufacturers are not in the country. Here are a could of tips:
1st, determine if anyone else in Australia is selling the item. If you’re the only one then you’re in luck and you found a good thing to sell. If you’re not, they you should price your item $5 bellow your competitor.
2nd, (assuming you’re the only seller in the country) I would set your price 1 cent bellow the US price. So, if its sold in the us for $50 then you market it for 49.99. That will at least get people to look at yours. And then, you’ll get them to buy your product rather than the US one by offering cheaper shipping. Shipping from the US wouldn’t be cheap so that will work to your advantage.
Best of luck
June 20, 2009 at 11:15 am #1007851Up::0Skiman, post: 7290 wrote:GST is a whole new can of worms. I guess i would be getting charged 10% GST when the goods get into the country and then charging the customer 10% GST? Are there any other fees for bringing the stuff (photographic equipment) into the country?Could someone please run me through an example for a product that costs me $172.46 US Dollars (and $229.95 US for the customer)? Postage is $53US for the single item.
Kind regards,
Skiman
Have you looked into Import Duty yet?
Some info that I have on my site, for personal overseas shoppers, is:
Purchases over $1,000 will incur Customs Duty, plus GST at 10% on the combined cost of the goods, the duty and the delivery charges.
Customs duty may be 5%, but you should check this.
Credit Card fees for international transactions can vary by Bank, my last one for about $120 was only $1. Not enough for most people to worry about, or even think about, when comparing prices.
Any GST paid by you will be offset against the GST charged, and would be best ignored in your calculations, until you come to setting your final GST inclusive selling price.
The figures could go something like:
US$172.46 Cost
US$ 53.00 Postage
US$ 225.46 Total or A$322 then add 5% Duty = A$338.20 your costThe US Retail price would be $282.95 or A$404.20 with the delivery charge included. (at 0.70 FX)
You could then sell for A$399.00 but that would include GST and you absorb all other costs including delivery.
Selling price breakdown is:
A$362.73 Your pre GST selling price
A$ 36.27 GST charged
A$399.00 Price to customerSo, you have paid $338.20 in total, and get back $362.73.
A profit before your delivery cost to the customer of A$24.53
One problem that you have is this tax ruling:
The current information from Australia Customs is that goods received by post, valued at UNDER $1,000 are free from Customs Duty and GST. (Last checked June 2008).
The customer buying direct from the USA is exempt from paying GST and Duty, YOU are NOT.
I think I got all those figures right, but please double check it, as it is getting late.
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