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Distribution channels


									Costing & pricing
Siegfried Bank
   cost                     added value
    of                       perception
 product                       buyer

low prices                  high prices
 no profit                  no demand
• internal exercise
• controllable (till a certain extent)
• calculating the cost price of the product (EXW) +
  cost to deliver at agreed destination (CIF)
• bookkeeper’s decision

• external exercise/negotiating skills
• dependent on market conditions & competition
• dependent on perception of buyer of the product
• commercial decision
Internal costing         External costing
• raw materials          • sales costs
• utilities                 – agent’s commission
• direct labor              – samples
• packing material       • delivery costs
• overhead                  – inland transport
   – administration         – port charges
   – human resources        – shipping costs
   –R&D                     – inspection costs
   – technical support      – export documents
   – marketing              – finance charges
Internal + external costs = total costs
• lower limit of price level (lower = no profit)
• allocation of fixed costs important

Selling price
• should minimally cover variable + (part) fixed
• dependent on market conditions and quality
• upper limit of price level (higher = no demand)
1. Variable costs
  All costs directly related to the level of
  production and sales of the product
     •   raw materials and packing
     •   utilities
     •   direct labor costs?
     •   delivery costs (mostly)
     •   sales costs (mostly)
2. Fixed costs
All costs not related to the level of production
and sales (overhead)

   • quality control
   • certification costs
   • administration department
   • marketing costs (brochures, trade fairs)
   • marketing department
3. Sales costs
Mostly variable
• commission for agents (% on FOB selling
• promotional discounts (% on selling price, €
  per carton)

Sometimes fixed
• samples
4. Delivery costs
•   inland transport and shipping costs (CIF)
•   loading costs
•   insurance
•   finance costs

• inspection
• export documents
               Fixed costs allocation
Locally sold                New export market
Variable prod. Costs   50   Variable prod.costs   60
Fixed prod. Costs      20   Delivery costs        20
Delivery costs         10   Sales costs           10
Sales costs             10 Profit                5
All other fixed costs   40 Sales price          95
Profit                  10 No fixed costs covered
Sales price            140
Fixed costs totally covered
by local sales
   Calculating for exports

   Delivery condition: DDP Paris
                          variable costs + (part)
   Ex works
                          fixed costs + profit
                          export documents + inland
  Free On Board
                          transport + loading charges

Cost Insurance Freight    insurance + shipping costs

                          unloading + import duty +
Delivered Duty Paid
                          VAT + transport to Paris
 INFOPESCA (South and Central America)
INFOFISH (Asia and Pacific region)
INFOSAMAK (Arab countries)
EASTFISH (Eastern and Central Europe)
INFOYU (China)
Most important international Journals:
•Seafood Leader, Seattle – US

•Seafood International, Croydon – UK

•World Fish Report, Wells – UK

•Produit de la Mer, Rennes – France

•FAO Publications: Globefish, Infofish
  Plans of the EU and how are exporters effected, e.g.
                       recent directive:

•conservation of fish stocks
    •= good stockmanagement becomes a marketing tool
•structural adjustment and fleet management
    •= smaller fleet, less landings = more imports
•bilateral agreements in fishing policies
    •= shopping tour for fishing rights planned
• Thank You

• Sea U in Indonesia

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