Tuesday 12 April 2016

CALCULATION OF YOUR PRODUCT COST IN RUSSIA

One of first steps to approach Russian market is to understand what is your product price locally and compare it with competitors prices. This will give you idea of contribution margin you can achieve and also give you idea what market segmentyou should aim for.

To calculate cost of your product in Russia you need to:


a) define HS code of goods

b) define average consignment (weight, volume) and askyour forwarder to 
calculate freight cost to your distribution center in Russia or to Customs terminal.
For more precise calculation you can ask forwarder to split freight cost into two parts (delivery from Shipper to the Russian border and further delivery from the border to Customs terminal / end destination)

Note: Roughly estimation for full truck load of 20 tons and 13,5 loading meters is 2000-2200 EUR for delivery on DDP Saint-Petersburg terms from Baltic States of EU.

Once you have defined HS code and freight cost you can use following simplified formulas to calculate cost of your product in Russia.


Cost of consignment on terms DDP Saint-Petersburg without VAT= (cost price of consignment on EXW factory terms +  freight cost to Russian border including cost of making export documents)*import Customs duty + customs fee + terminal fee without VAT + payment to Customs broker / forwarder without VAT + cost of certification without VAT if any.

Cost of 1 pc of goods on terms DDP Saint-Petersburg without VAT = Cost of consignment on terms DDP Saint-Petersburg without VAT / quantity of pcs in consignment

Sales price in Russia with VAT= (Cost price + contribution margin + administrative expences)*VAT

Note: For simplified sales price calculation estimated administrative expences can be 5% of cost price.

Regards, Yury

No comments:

Post a Comment