How to build an export pricing strategy that actually works

Your competitors are already shipping overseas—and they’re figuring out pricing through trial, error, and expensive mistakes. You don’t have that luxury.

Export pricing isn’t just adding shipping costs to your domestic price list. It’s a calculated balance between covering your true costs, absorbing tariffs and currency fluctuations, and staying competitive in markets where you’re the outsider. Get it right, and you unlock profitable growth in new territories. Get it wrong, and you’ll either lose money on every sale or price yourself out of contention.

Why your domestic pricing model breaks down overseas

Your factory-gate price works perfectly for UK buyers. But the moment you quote that same price to an overseas customer, you’re ignoring a stack of additional costs that will eat into your margin—or worse, surprise you after the deal is signed.

Export sales come with costs your finance team may not have modeled. Freight and logistics alone create a complex web: ocean freight, air cargo, customs brokerage, warehousing, and last-mile delivery all add up differently depending on destination. Then come the tariffs. The US implemented an additional 10% tariff on UK imports effective 5 April 2025, on top of existing duties. Steel and aluminum face even steeper 25% tariffs.

Compliance and documentation create their own administrative burden. Safety declarations, certificates of origin, and enhanced customs paperwork for derivative steel and aluminum products all cost money. Currency risk can turn a profitable order into a loss between quote and payment. International buyers often expect longer payment terms, and cross-border debt collection is expensive and uncertain.

The numbers tell the story. UK exports to the US decreased by £0.7 billion (14.5%) in June 2025, partly because manufacturers couldn’t absorb these new costs without repricing. The mistake most manufacturers make is calculating these costs after they’ve already quoted a price. By then, you’ve committed to a margin that may not exist.

The three core components of export pricing

Building a sustainable export pricing strategy means getting three elements right: your cost baseline, your competitive positioning, and your pricing model. Each one supports the others, and weakness in any area undermines your entire approach.

Calculate your true landed cost

Landed cost is what it actually costs to get your product into your customer’s hands in their market. This is your absolute floor price—sell below this and you’re funding someone else’s business.

Start with your Ex-Works (EXW) price—the cost at your factory gate. Then add logistics costs: packaging for international shipping (often heavier than domestic), inland transport to port or airport, freight forwarding fees, ocean freight or air cargo, insurance in transit, port handling and customs clearance, and final delivery to customer.

Next come duties and compliance costs. Import tariffs in the destination country change frequently, so check current rates. Add VAT or sales taxes, certificates of origin, product testing or certification fees, and customs broker fees. For example, a manufacturer selling machinery parts to the US now faces the additional 10% tariff on top of existing duties, plus the administrative burden of US customs duties even on low-value shipments after the elimination of the $800 de minimis threshold from 29 August 2025.

Don’t forget currency and payment costs. Foreign exchange conversion fees, hedging costs if you’re locking rates, payment processing fees for international transfers, and the cost of extended payment terms (your working capital is tied up longer) all chip away at margin.

Build this calculation in a spreadsheet for each major market. Update it quarterly as freight rates, tariffs, and exchange rates shift. This isn’t a one-time exercise—it’s a living document that reflects the real cost environment you’re operating in.

Understand your competitive position in each market

Your UK reputation means nothing in markets where you’re unknown. Price is often the first thing foreign buyers use to shortlist suppliers.

Research what local manufacturers charge for similar products. Check what other importers are selling at. Look at online marketplaces, industry directories, and trade publications in your target market. But go deeper than just price comparison.

Consider these positioning questions: Are you entering as a premium option (higher quality, better service) or a value alternative? Do you have a genuine differentiator (proprietary technology, faster delivery, better warranty)? Are you competing on total cost of ownership (your product lasts longer or requires less maintenance)? Can you offer something local suppliers can’t (customization, smaller minimums, faster innovation)?

Research shows that localized pricing strategies can increase international sales by 10-15% compared to standardized approaches. This doesn’t mean just converting currency—it means pricing according to what that market will bear based on competitive alternatives.

A UK electronics component manufacturer discovered that while they were 20% more expensive than Chinese competitors in Southeast Asia, they could command a 30% premium over Chinese suppliers when selling to European customers who valued quality certification and faster delivery. Same product, different market dynamics, different pricing strategy.

Choose your pricing model

You have three main options for how to quote prices to international customers, and each carries different implications for both margin and customer experience.

Ex-Works (EXW) means the customer handles everything from your factory door. You quote the lowest price, but the buyer deals with all logistics and assumes all risk. This works for experienced importers with their own freight forwarders but can scare off smaller buyers who don’t have logistics expertise.

Free on Board (FOB) splits the difference. You handle costs to the ship or plane, the customer takes over from there. This is common in international trade because it divides responsibility cleanly at a logical point—the moment goods are loaded onto the vessel.

Delivered Duty Paid (DDP) puts everything on your shoulders. You handle all logistics including duties and taxes, delivering to the customer’s door. You quote the highest price but offer the most convenience. UK exporters trading on DDP terms must now calculate and pre-pay US duties and taxes, which requires careful calculation and working capital management.

Each model has margin implications. EXW looks cheapest but forces customers to manage complexity many aren’t equipped to handle. DDP is convenient for buyers but puts all cost risk on you—if freight spikes or duties increase between quote and delivery, you absorb the difference. Many manufacturers use FOB for standard terms but offer DDP as a premium service for customers willing to pay for simplicity.

Managing currency risk without killing your margin

Exchange rate movements can wipe out your entire margin on an export order. A 5% swing in GBP/USD between quote and payment is common—and that might be your entire profit margin.

You have several options to manage this risk, each with trade-offs. The simplest approach is quoting in your home currency. Quote in GBP and let the customer handle conversion. This shifts currency risk to them but may make you less competitive against local suppliers who quote in their home currency. Customers prefer certainty, and currency risk is uncertainty they’d rather avoid.

Quoting in the customer’s currency is more competitive but exposes you to currency risk unless you hedge. You need a clear process for this approach to work without bleeding margin. Forward contracts let you lock in an exchange rate for a future date. If you quote a customer in USD with 60-day payment terms, you can buy a forward contract that guarantees the GBP/USD rate you’ll get when that payment arrives. This costs a small fee but eliminates surprise losses.

Some manufacturers build in a currency buffer by adding a small percentage (2-3%) to their price to absorb normal currency fluctuations. This is essentially self-insurance and works if you have many transactions that average out over time. Another approach is adjusting pricing quarterly. For long-term contracts or regular customers, include a clause that allows price adjustment if exchange rates move beyond a certain threshold (say, 5%). This shares currency risk between you and the customer in a transparent way.

A Midlands-based industrial valve manufacturer lost £40,000 on a single large order to Canada because they quoted in CAD, didn’t hedge, and the pound strengthened 8% before payment arrived. Now they use forward contracts on any order over £10,000 with payment terms longer than 30 days. The hedging cost is small compared to the protection it provides.

How to factor in tariffs without pricing yourself out

Tariffs are a direct hit to your competitiveness. The question is whether you absorb them (reducing your margin), pass them through (increasing your price), or split the difference. There’s no universal answer—it depends on your competitive position and margin structure.

If you’re selling commodity products, you likely have to absorb most tariff costs because customers can easily switch to cheaper suppliers. Your margin needs to be healthy enough to withstand this pressure. If you’re differentiated on quality, technology, or service, you can often pass through tariff costs to customers who value your unique offering. Frame it as an unavoidable external cost that affects all importers, not a profit grab on your part.

If you’re mid-market—neither commodity nor highly differentiated—splitting the difference often works best. Absorb part of the tariff to stay competitive, pass through the rest with clear explanation to customers about the external cost environment.

Consider this real scenario: When the additional 10% US tariff on UK imports hit in April 2025, a precision tools manufacturer had three choices for their $100 product. They could absorb the $10 tariff and keep price at $100, reducing margin by $10. They could pass through the $10 tariff and increase price to $110, risking the loss of price-sensitive customers. Or they could split the difference, increase price to $105, and reduce margin by $5.

They chose the third option and communicated proactively with customers about tariff impacts. They lost one price-sensitive customer but retained 90% of their US business. The key was framing it as a shared challenge rather than springing a surprise price increase on customers.

Remember that effective US tariff rates increased from 2.3% to 8.8% by May 2025. This isn’t a one-time adjustment—tariff landscapes shift continuously. Build flexibility into your pricing structure so you can respond to changes without renegotiating every customer contract from scratch.

Building margin into export pricing

After covering all costs and competitive considerations, you need to build in your profit margin. Export sales typically require higher margins than domestic sales for good reason.

Higher risk justifies higher margin. Payment risk, political risk, and customer concentration risk (losing one export customer hurts more than losing one domestic customer) all increase your exposure. Longer sales cycles mean more time and resources to close deals—you’re investing months in relationship building before seeing revenue. Higher service costs come from communication across time zones, potential travel, and technical support when you’re not local. Market development investment is substantial when you’re building brand awareness from zero in a new geography.

As a rule of thumb, aim for 10-20% higher gross margin on export sales than domestic sales. If your domestic margin is 30%, target 35-40% on exports. This might sound aggressive, but remember you’re also providing more value. You’re absorbing currency risk, navigating complex logistics, providing support in different time zones, and often offering extended payment terms that tie up your working capital.

The margin also gives you negotiating room. International customers expect to negotiate more than UK buyers. Having margin built in lets you offer strategic discounts without going underwater. You can use that margin to win the deal when it matters, rather than starting at your absolute floor price.

Practical pricing tactics that work

Beyond the strategic framework, several tactical approaches help manufacturers win export business profitably. These aren’t theoretical—they’re proven techniques used by manufacturers who’ve built successful export businesses.

Volume-based pricing offers better unit pricing for larger orders to offset fixed costs like documentation and freight. A £5,000 order and a £50,000 order have similar paperwork costs, so reward scale. This also encourages customers to consolidate orders rather than placing frequent small orders that cost you more to process.

Market-specific pricing recognizes that different markets have different price sensitivity. You might price aggressively in high-growth markets (like India or Vietnam) where you’re building share, while maintaining premium pricing in established markets (like Germany or the US) where customers value reliability and your brand carries more weight.

Bundle pricing includes value-added services (training, installation support, extended warranty) in your price rather than itemizing them separately. This simplifies comparison shopping and lets you maintain higher prices by emphasizing total value rather than just product cost. Customers see one number that solves their complete problem.

Payment term pricing offers a discount for faster payment. “Net 30 days or 2% discount for payment within 10 days” improves your cash flow and lets price-sensitive customers feel they’re getting a deal. You’re essentially pricing your working capital cost into the transaction in a way that gives customers choice.

Contract pricing for repeat customers offers annual contracts with pre-agreed pricing. This gives them budget certainty and gives you volume commitment. Include escalation clauses for major cost changes (freight, materials, tariffs) so you’re not locked into unprofitable pricing if the cost environment shifts dramatically.

Using technology to manage pricing complexity

Spreadsheets work until you’re quoting multiple products to customers in 10+ countries with changing freight rates, tariffs, and exchange rates. At that point, manual management becomes error-prone and time-consuming.

Consider systems that automatically update exchange rates so your quotes reflect current conversion rates. Track tariff changes by country and product code so you’re not manually checking government websites before every quote. Calculate landed costs based on real freight quotes from your logistics partners rather than outdated assumptions. Store pricing rules for different customer segments, markets, and order sizes so you’re applying consistent logic. Generate quotes in the customer’s local language and currency to reduce friction in the buying process.

Many manufacturers use customer relationship management (CRM) systems to track which quotes convert and which don’t. This data lets you refine pricing based on real market feedback rather than guesswork. If you’re winning 80% of quotes in Germany but only 20% in France, your pricing (or positioning) in France needs adjustment.

The same automation mindset applies to finding customers who can afford your export pricing. Rather than cold-calling random companies overseas, AI-driven lead generation platforms can identify prospects who match your ideal customer profile and are actively looking for solutions like yours. This saves weeks of manual research and unproductive outreach, letting you focus your time on qualified opportunities where your pricing makes sense.

Testing and adjusting your export pricing

Your first pricing attempt won’t be perfect. The best manufacturers treat export pricing as an ongoing experiment, using data to refine their approach over time.

Track quote-to-order conversion rate by market. If you’re quoting 20 prospects and winning one, your price is probably too high or you’re targeting the wrong customers. Track margin by market to understand which countries deliver the best profitability after all costs are accounted for. Calculate customer acquisition cost—how much does it cost (in time, travel, samples) to win a customer in each market? Measure customer lifetime value to see if customers are placing repeat orders or if every sale is a one-off battle.

Review this data quarterly and adjust your strategy. You might discover that one market has much higher logistics costs than expected, requiring a price adjustment or exit decision. Customers in another market might consistently pay within 20 days, letting you offer better payment terms as a competitive advantage. A competitor may have dropped their prices, forcing you to match or emphasize your differentiation more clearly. Tariffs may have changed, requiring you to recalculate landed costs and adjust accordingly.

A Manchester-based packaging machinery manufacturer reviews export pricing quarterly. They discovered that while Germany was their largest export market, their profit margin was 12% lower than in France due to more aggressive competitors. They repositioned their German offering as premium quality rather than competing on price, accepted lower volume, and improved profitability by 18%. The data told them where to adjust.

Common export pricing mistakes to avoid

After analyzing dozens of manufacturers’ export pricing approaches, certain mistakes appear repeatedly. Avoiding them puts you ahead of most competitors.

Underestimating total costs is the most common mistake. Forgetting one cost element (insurance, customs broker fees, packaging) can eliminate your margin entirely. Build a comprehensive checklist and use it for every quote. Copying domestic pricing assumes your home market pricing reflects conditions that don’t exist overseas. Your brand equity and competitive position in the UK don’t automatically transfer.

Ignoring local competition means you might be competitively priced against other UK exporters but double the price of local manufacturers in the destination market. You need to understand both sets of competitors. Quoting in customer’s currency without hedging exposes you to currency swings that will eventually hurt you. Either quote in GBP or hedge your exposure.

Failing to account for payment terms means 90-day payment terms cost you real money in working capital. Price accordingly or stick to shorter terms. Not building in negotiation room is problematic because international customers negotiate harder than domestic ones. If your first price is your rock-bottom price, you have nowhere to go when they push back.

One-price-fits-all approach ignores that different markets have different economics. A price that works in Germany may be too high for Poland or too low for Switzerland. Ignoring cost changes means your export prices become unprofitable over time as freight, materials, and tariffs change. Regular review prevents this slow margin erosion.

Build a pricing strategy that grows with your business

Export pricing isn’t a one-time calculation—it’s a strategic framework you refine as you learn what works in each market. The manufacturers winning export business profitably aren’t guessing. They’re systematically testing, measuring, and optimizing their pricing for each market they serve.

Start by calculating your true landed costs for your top three target markets. Add appropriate margin based on the value you provide and risks you’re taking. Quote the first few customers, see what converts, and adjust based on feedback. Track your metrics, talk to customers about their decision-making process, and watch what competitors are doing. Export pricing becomes easier with experience because you understand what each market will bear.

Your biggest challenge isn’t just setting the right price—it’s finding the right customers who value what you offer enough to pay it. Rather than wasting time with unqualified prospects, Sera’s AI-powered platform automatically identifies export leads who match your ideal customer profile and engages them in their language. Book a demo to see how automating your prospecting lets you focus on quoting and closing the deals that actually matter.