Types of World Trade Prices
Finding representative and affordable world prices for sellers and buyers is a necessary prerequisite for commercial activity in the foreign market. However, it is often difficult to obtain reliable data on world prices due to the fact that information about their level, methods of establishment and practical application remains in some cases the commercial secret of individual firms, as well as due to the irregular nature of the publication of data, which, in turn, does not allow to make clear ideas about their level, proportions and breadth of distribution.In international trade, as a rule, allocate settlement, reference, price-list, exchange, auction prices, as well as prices of catalogs, prospectuses, trades, offers and actual transactions.
If possible, data on world trade prices can be divided into two categories:
• published - first of all, reference, stock, auction, bidding prices, catalogs, prospectuses; prices of price-lists are sometimes published;
• received through special channels by special requests or calculations - these are bid prices and settlement ones. If necessary, in this way, you can get the prices of the price-lists. A special place is occupied by the prices of actual transactions. In some relatively rare cases, they are published.
Naturally, the way information is received about prices significantly affects its availability, the possibility of using it in practice.
From the point of view of availability, the listed types of prices can be arranged in the following sequence:
1) reference - are published in widely distributed sources and therefore in most cases can be obtained without much difficulty;
2) stock, prices of auctions, trades, catalogs and prospectuses - information about them is contained in special editions published openly, on which the receipt requires the establishment of contacts with their publishers;
3) calculated - are determined on the basis of official customs statistics of individual countries by comparing the value and physical volumes of exports or imports for a particular commodity group or individual product. The receipt of these prices is associated with the acquisition of customs statistics and special calculations;
4) offers and price lists - are obtained mainly through special requests from manufacturers or their agents, for which it is necessary to have established channels of communication in the relevant commodity markets and to act as trading partners, which is not possible for all individuals and legal entities interested in world prices;
5) actual transactions - are rarely published, and in a somewhat aggregated (averaged) form. In most cases, they can be obtained only by regularly speaking on the market with purchases and sales. This situation means that the prices of actual transactions, as well as the prices of offers and price lists, as a rule, are not generally available, their receipt requires performances in the market and is associated with certain difficulties.
The prices of actual deals, stock prices, bidding and auction prices are the closest to the real world prices level, the reference prices are the most remote from it. A special position is taken by the settlement prices, since in some cases they can correspond to the actual level of market prices, while others may deviate substantially from it.
Priority is the elimination of overstatement of prices associated with incomplete consideration of market conditions and the interests of the buyer at certain stages of pricing. It must be borne in mind that the seller overstates the price not only because of the desire to increase his profit, but also because of the inclusion in the initially offered price of various kinds of additional costs - to increase the chain of raw materials and materials, wages, commercial and currency risks, possible marriage in the manufacture and supply.
In practice, the problem of price leveling is solved by using the so-called discounts on the payment. As a rule, the sizes of these discounts are determined by the method of peer reviews and differentiated by goods and partner firms.
The greatest probability of obtaining a discount exists in conditions that are relatively favorable compared to competitors and in its critical situation, since in the first variant it can transfer part of the profits to the partner without detriment to its development, and in the second - by any means tries to stay in the market and to keep the volume of production and supplies. Strengthening monopolization reduces the possibility of obtaining discounts. In some cases, firms that provide a high level of monopolization of the market generally refuse to grant discounts for trading.
For raw materials, a discount from the price is more difficult to obtain than for finished products, because in this area there is extensive information on prices and terms of trade, which contributes to a more objective formation of prices and reduces the possibility of its overstating by the supplier. Information on the prices of finished products is much weaker, and this creates a uelovia for their overstating. The influence of the factor of novelty and complexity of the product is manifested in the fact that it is relatively easier to get a discount from the price at the initial and final stages of the "market life" products, i. in conditions when the product only conquers the market, enters it, or, on the contrary, ends its life cycle on the market, is replaced by another, more new product in terms of technical level.
The world price of a specific product, taken as a guide for the conclusion of an international contract, is necessarily adjusted. The transition from the world price-reference to the price of a particular transaction is carried out through price adjustments. They are divided into amendments common to all transactions, and corrections related to the characteristics of the goods.
Regardless of the features of the goods, the following general amendments are made: to the kind of currency in which this transaction will be concluded, the terms of payment, the basic terms and the delivery time.
Depending on the features of the goods, special amendments are made.
If the consumer parameters of the product are amenable to a clear quantitative definition, then, as a rule, corrections are applied with regard to parametric pricing methods. To complex designs, when different assembly variants are possible, apply correction for the equipment. With regard to serial production, serial corrections are made. This practice is most common in capital-intensive and knowledge-intensive industries. Production in these industries is preceded by scientific research and experimental testing.
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