Selling in multiple currencies raises many issues for manufacturers and merchants looking to sell in US dollars (or Pounds or Euros) for the first time. One of the main issues centres on dealing with foreign exchange risk. This has been a very hot topic with the volatility of the US dollar over last few years and the uncertainty of the current economy.
Here are a few simple guidelines to help you set prices in other currencies. When you set your prices in other currencies, don’t set them based on a quick glance at today’s exchange rate.
Look at recent trends and if possible some forecasts. No one can predict with total accuracy, but there are numerous sites like http://forecasts.org/cdollar.htm
that provide forecasts for the coming year.
It is also wise to build in a bit of a cushion so that if the other currency drops in value, you don’t lose your margin
. This is mostly a risk for discounters operating with small margins but if you have standard retail margins, you should have time to react to price changes. None of the merchants we worked with have ever complained when the exchange rate moves in the other direction!
If you follow these guidelines then you should be able to keep your prices stable for a season
or whatever your relevant business cycle is. Customers will be put off if your product is $19.99 one week, $21.99 the next and $20.99 the week after. Which reminds me…
When setting prices, don’t try and make all your mark ups the same down to the penny. You want to make sure that your prices make sense and look like standard consumer prices
. People are not used to seeing something for sale for $23.87. Round up or down as appropriate to end in .x9, x5 or .99. You need to look like a local to sell to the locals.
As a final note, you will also need to set up merchant accounts to accept payments in your additional currencies. Costs vary by provider so it is worth it to shop around.