One small omission in pricing structures is the biggest mistake Australian businesses make when launching offshore, which can threaten the viability of exporting as a growth strategy.
Mike Todd of Twodeck Agency told My Business that time after time, he sees business owners making the same mistake when launching overseas.
“One of the big problems that most companies make when they intend to go international is they get the pricing wrong,” he said.
“When you look through the pricing, what they’ve not done is they’ve not built a margin which will give a distributor enough money to make money.”
That effectively cuts off access to distributors, and forces the business to then assume the difficult task of approaching retailers directly.
“If they don’t have a distributor, then they don’t have that local knowledge,” said Mr Todd, which can be everything from retail negotiations to translating and tailoring marketing materials for the local marketplace.
And, he added, once the mistake is in place, it is exceptionally difficult to address as the business continues to grow.
“If you haven’t built that margin structure in, recrafting at the end of five years when you’ve got a market here domestically is almost impossible,” Mr Todd said.
“Either you’ve got to go back to your factory and say: ‘Listen, we need to make it 15/16 per cent cheaper’, or you’ve got to raise prices to build back in the margin that you should have done at the beginning.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
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