Step-by-Step Guide to Exporting

Sourced from official Australian government resources, laid out in a step-by-step guide, just as I wished I had found it.

Hope it proves helpful!

Step 1: Understand Market Access

Market access determines whether you can sell goods or services internationally. Governments establish trade rules and policies to safeguard human, animal, and plant health, as well as to protect their local markets and economy.

These rules and policies are known as ‘market access barriers‘ or ‘trade barriers.‘ 

A tariff is a tax or duty applied to some imported products, increasing their price and making them less competitive compared to domestic products.

Tariffs may or may not apply to you depending on your product, market, and any applicable Free Trade Agreement (FTA). You can use our Tariff Finder tool to look up tariffs that affect your business. If tariffs apply, factor them into your export pricing based on the agreed Incoterms®.

Examples of Common Tariff Barriers:

  • Ad Valorem: A levy on a product based on a percentage of its value. For instance, the EU may impose a 25% tariff on the recommended retail price (RRP) of imported electronics from South Korea, making a €1,000 laptop cost €1,250 for EU consumers. This tariff protects local manufacturers but increases prices for imported goods.

  • Anti-Dumping: ‘Dumping’ occurs when a company exports a product at a lower price than it charges in its domestic market. For example, the Canadian government may impose an anti-dumping duty on steel beams from China sold at below-market prices to protect local manufacturers.

  • Countervailing Duty: This duty is applied to imported goods that might have received subsidies from the exporting country. For example, the US might impose a countervailing duty on subsidised Brazilian sugar to protect its domestic sugar industry.

  • Specific Tariffs: A fixed fee on a single unit of an imported good, regardless of its value or properties. For example, Japan may impose a ÂĄ500 tariff on each imported bicycle, regardless of the bicycle’s price or specifications.

Non-tariff barriers restrict trade through means other than tariffs, such as policies that limit imports, which can contravene international trade rules. These barriers impact your export business by adding more paperwork, such as:

  • Environmental documents
  • Emissions controls
  • Illegal logging declarations

Other non-tariff barriers may include bans, restrictions, or quotas on product imports.

Examples of Non-Tariff Barriers:

  • Embargoes: A complete ban on imports from a certain country. For example, the UK might impose an embargo on goods from a country due to political conflicts, prohibiting the acceptance of any goods or services from that country. Trading with an embargoed country may breach international regulations, so seek advice from a legal professional experienced in international trade.

  • Import Quotas: Restrictions on the importation of certain goods. For example, Australia might limit the volume of dairy products that can be imported each year to protect its domestic dairy industry, often linked to the issuance of licences.

  • Licences: A government may grant a licence to a business to import a specified type of product. For example, the Indian government might allocate import licences for pharmaceuticals, which can restrict competition and increase consumer prices.

  • Local Content Requirements: The importing market’s government may require a percentage of the product or its value to be locally manufactured. For example, if you are exporting electronics to Brazil, they may require that 30% of the components are sourced from local manufacturers.

  • Sanctions: Sanctions limit trade by slowing or restricting a country’s ability to trade, adding extra trade procedures and administration. For instance, a country under international sanctions might face additional checks and paperwork for every shipment.

  • Subsidies: Subsidies make local businesses more competitive by lowering their costs. For example, the Canadian government may subsidise its forestry industry, giving local timber producers a price advantage over imported timber. 

To gain market access, you should consider:

  • Export rules and legal regulations for your product or service 
  • Export declarations and certifications
  • Product Classification: commodity codes, tariffs, taxes, and duties 

Understanding these simplifies, speeds up, and reduces the cost of entering foreign markets. Failing to comply can lead to serious financial and legal issues.

As an exporter, you must comply with Australia’s laws and regulations, as well as those of your target export market. This encompasses rules, requirements, and standards related to:

  1. Your Business and Product.
  2. Shipping and Transport: Adhere to regulations governing the shipment and transportation of goods.
  3. Your Suppliers and Partners: Verify that your suppliers and partners are compliant with relevant laws and standards.

The Australian government provides an excellent tool to understand the local laws and regulations in international markets: Export Rules Finder.

→ Other regulations and legal requirements to consider when exporting:

Australia places restrictions on exporting certain goods and services, prohibiting their export under any circumstances. For other goods and services, specific conditions may apply that you need to meet.

In some situations, you can export “prohibited goods” if you fulfill certain conditions and obtain written permission beforehand. This requires applying for and receiving:

  • A permit
  • A license
  • An exemption

However, there are certain goods that are completely prohibited and cannot be exported under any circumstances.

The Australian Defence Force oversees the export of military and dual-use goods and technology. The Defence and Strategic Goods List (DSGL) outlines items and technologies that have military applications or could be used to develop weapons of mass destruction. These goods may be either prohibited from export or require a permit. You can check if your goods or technology are on the list by using the Online DSGL Tool. 

The Australian Government regulates the export of specific health, cosmetics, food, and agricultural products, known as prescribed goods. This ensures trading partners that Australian exports meet their import requirements and are suitable for their intended purpose. If you are unsure whether your product is considered a prescribed good, you can check on the Department of Agriculture, Fisheries and Forestry website. 

You must have your organic and bio-dynamic goods certified before exporting them. This requires certification for each facility in your supply chain, such as:

  • Producers
  • Suppliers
  • Processors
  • Manufacturers
  • Storage facilities

You need to have your organic and bio-dynamic goods certified before exporting them. This includes certifying each facility in your supply chain, such as:

  • producers
  • suppliers
  • processors
  • manufacturers
  • storage facilities.

To get certified you must contact an approved certifying body. They will provide advice on the process. This will include inspecting your premises to make sure you comply with:

Tip: Start early, certification takes time (up to 3 years)

To ensure that goods meet appropriate safety and quality standards, the Australian Government regulates the export of:

  • Medicines
  • Medical devices
  • Human substances

Find out if you need to register your products or apply for a permit on the Therapeutic Goods Administration website. 

The Australian Government takes the threat of terrorism very seriously.

It keeps a list of terrorist organisations and a consolidated list of sanctioned individuals and entities. It is a criminal offence to do business with these individuals and entities. 

As an Australian business, it is also a criminal offence to:

  • Hold assets for terrorists or terrorist organisations
  • Provide assets to terrorists or terrorist organisations
  • Provide support or resources to terrorists or terrorist organisations

A sanction is an international economic penalty that includes restrictions on trade in goods and services and economic activity. Australian sanction laws apply to activities both within Australia and overseas by Australian citizens and Australian-registered corporate bodies. Violating a sanctions measure is a serious criminal offense, with penalties including up to 10 years in prison and substantial fines. 

Read the Australian Sanctions Office guide on sanctions.

Exporting hazardous waste is prohibited unless you have a permit. The type of permit required depends on the type of waste and the destination country. Information on obtaining a permit to export hazardous waste can be found on the Department of Climate Change, Energy, the Environment and Water’s website.

Once you’ve chosen your export market, protecting your IP should be a top priority. It’s also important to avoid infringing on someone else’s IP.

Securing IP rights in your target country can boost your competitive edge by safeguarding your IP assets, help you establish your market position, prevent local competitors from copying your ideas, and reduce the risk of infringing existing IP in the market.

You can protect your brand, invention, design, or plant variety in another country by applying directly to the country’s IP office or authority or via an international system.

Be prepared to pay fees for each overseas IP right you apply for. The duration of IP protection varies from country to country.

You can find more information about protecting you IP here.

It’s essential to check the data storage regulations for each country you operate in. Many countries have strict rules on how personal data can be collected and stored.

The storage of Australian data (both in and outside Australia) is governed by the Australian Privacy Principles on the Office of the Australian Information Commissioner website.

If you target or collect data related to people in the EU, you must also comply with the General Data Protection Regulation (GDPR), which is the world’s strictest privacy and security law. 

A sanction is an international economic penalty that includes restrictions on trade in goods and services and economic activities. Australian sanction laws apply to activities in Australia and those undertaken overseas by Australian citizens and Australian-registered bodies corporate. 

Read the Australian Sanctions Office guide on sanctions for more information.

Austrade is committed to reducing abuses of human rights, modern slavery, money-laundering, and bribery in both domestic and overseas markets.

All organisations operating in Australia or overseas should adhere to the OECD Guidelines for Multinational Enterprises, which provide principles and standards for responsible business behaviour.

Before entering any overseas markets, conduct thorough due diligence to ensure that employees, contractors, suppliers, partner organizations, and other third parties meet the responsible business standards expected by the OECD.

Bribing foreign public officials is a serious crime under Australian law and can result in fines and imprisonment. It is also illegal in many other countries.

The Attorney General’s Department offers an online learning module that outlines steps for promoting compliance, including implementing an anti-foreign bribery and corruption compliance program, understanding that making facilitation payments (unofficial payments to secure or speed up routine government actions) is illegal in most countries, and researching before engaging with third parties like agents and business partners.

Businesses have a responsibility to respect human rights in their operations and supply chains.

Conduct appropriate due diligence to ensure your activities do not support or appear to support human rights violations or abuses. This includes being aware of the activities of your suppliers and channel partners.

 

Modern slavery encompasses severe exploitation of individuals, including child labor and forced labor.

The Modern Slavery Act 2018 requires any organization with revenue over $100 million to examine and report on modern slavery in their global supply chain. Other companies may report voluntarily.

1.2. Export Declarations & Certifications

Each market has different rules for getting goods through customs. You may need to provide specific certifications or documentation with your shipped goods. The required documents will depend on:

  • Australian laws and regulations
  • Rules in the market you plan to sell in
  • Your product
  • How you’ll transport your goods

→ Common export documents include:

You’ll need to lodge an Export Declaration for goods you export, unless they are exempt.

An Export Declaration is a statement made to the Australian Border Force (ABF) by the exporter, the owner of the goods, or their agent. It provides the ABF with information about the exported goods and the export transaction. You must complete all mandatory fields on the Export Declaration before exporting the goods. 

You must declare them if the goods:

  • are valued over AUD2,000
  • need an export permit, regardless of their value
  • are being claimed for duty drawback
  • are dutiable or excisable goods and the duty or excise duty is unpaid.

Goods that are exempt from requiring an Export Declaration include:

  • personal effects
  • pets
  • goods with a value of less than AUD2000
  • some goods temporarily imported under section 162A of the Customs Act 1901
  • Australia Post or diplomatic bags of mail
  • Australian aircraft and ships’ spares
  • military goods of any value that are the property of Australian Government, for use overseas by Australian Defence Forces
  • Australian domestic cargo
  • containers for the international carriage of cargo and ships’ stores.

 

An Export Declaration can be lodged either:

Export Declarations can be lodged up to six months prior to the export date of the goods.

Each consignment of goods requires a separate export declaration. A consignment is defined as goods sent from one consignor to one consignee. It does not need to be a single package or exported at the same time.

You are considered the consignor if you are the exporter, owner of the goods, or an agent acting on behalf of the exporter or owner under certain circumstances. The consignee is the final receiver of goods exported from Australia, regardless of whether they ordered or paid for the goods.

Example:

If a consignor sends goods to a consignee, the consignor should lodge an export declaration for all the goods.

If a consignor sends goods to multiple consignees, the consignor should lodge multiple export declarations, one declaration for each consignee.

Complete, but do not sign the Export Declaration (B957 Form) or Supplementary pages (B957a Form), if used. You (or your agent) will sign the Declaration when requested by one of the officers.

  1. Present the Export Declaration at one of the counters with:
    • Evidence of identity (EOI) documents (originals or certified true copies)
    • Completed client registration form (if required)

After the EOI check has been completed successfully, the Export Declaration will be processed. If the Export Declaration requires amendments, the ABF will contact you or your agent and request an amended Export Declaration.  You can also send an amendment without a request.

2. When processing has been completed, the ABF will provide you (or your agent) with an export entry advice that is either:

    • An authority to deal with the goods for export
    • An authority to deal with the goods for export, subject to a condition that a specified permission be obtained
    • An authority to deal with the goods for export, subject to a condition that a security required under section 16 of the Excise Act 1901 be given
    • A refusal to provide an authority to deal (meaning the goods cannot be exported)

→ Lodge the Export Declaration at one of the counters in your State or Territory. With prior approval, you can use a courier to lodge an Export Declaration at specified counters. For EOI requirements and the use of couriers, click here.

→ After making an Export Declaration, you must keep all relevant documentation for five years. For information about exporter requirements, see Exporter obligations and reporting requirements (111KB PDF).

The exporter, or their agent, must notify the Australian Border Force (ABF) of changes to an export by lodging an export declaration amendment as soon as possible.

  • An amendment to an electronically lodged declaration must be lodged electronically.
  • An amendment to a manually lodged declaration must be lodged manually. For manual amendments, see Form B957 Export Declaration (242KB PDF). 

If goods are not exported within 30 days from the intended date of export, you must withdraw the Export Declaration within seven days of the end of that 30-day period.

  • Failure to withdraw an Export Declaration within seven days is an offence.
  • If the goods are later exported, a new Export Declaration must be lodged with the Australian Border Force (ABF).

An electronically lodged declaration can be withdrawn electronically or manually. For manual withdrawal of a declaration, see Form B611 Export Declaration Withdrawal Notice (647KB PDF). 

Exporters may opt to become “Confirming Exporters” when they have incomplete export information that will only be finalised after goods are loaded. This option is restricted to specific types of goods. Confirming Exporters can lodge an Export Declaration based on estimates and are required to confirm the exact amounts within an agreed timeframe.

Agents cannot apply for Confirming Exporter status on behalf of exporters. However, if an exporter already holds Confirming Exporter status, their agent can submit a declaration on their behalf. Agents can also independently apply for Confirming Exporter status.

You can make amendments to your Confirming Exporter Status by lodging a new application form with updated details. For applications to become a Confirming Exporter, see Form B111 Confirming Exporter Status (672KB PDF).

If you’re exporting goods from Australia by air, you must have a security declaration. The airline won’t accept your cargo without it.

To get a security declaration, you can either:

  • Get a Regulated Air Cargo Agent (RACA) to examine and clear air cargo on your behalf.
  • Secure your own air cargo if you’re an approved Known Consignor.

 

Cargo from a Known Consignor does not require additional inspection before being loaded onto an aircraft.

Your business may qualify to become a Known Consignor if it initiates air cargo.

This involves knowing the contents of each box, package, or carton and meeting one of the following criteria:

    • Your business manufactures, assembles, or produces goods for air transport, such as a farmer packing fruit or a manufacturer assembling products.
    • Your business owns or controls the goods when they are ready for air transport, such as inspecting and packaging clothes into boxes and then consolidating them into a consignment.

→ How to Become a Known Consignor

To achieve Known Consignor status, your business must adhere to stringent security standards, ensuring that unauthorized explosives cannot be inserted into cargo at:

      • Your designated Known Consignor sites
      • Any point in your air cargo supply chain

You will need to provide evidence that your business meets these standards, which will vary depending on your operations. Additionally, your business must have a current Australian Business Number (ABN) or an Australian Company Number (ACN).

→ Known Consignor scheme and how to apply.

A Certificate of Origin confirms where goods were grown, produced, or manufactured. It identifies the product and certifies its origin in the specified country. You will need to provide a Certificate of Origin when:

  • Exporting to countries that Australia has a free trade agreement (FTA) with
  • The importer requires one for customs clearance
  • A Documentary Letter of Credit requires one. This is a letter from your buyer’s bank guaranteeing payment according to the terms in the letter.

→ Types of Certificates of Origin

1. Non-preferential Certificates of Origin

These certificates confirm the origin of goods for trade with most countries. They help governments collect data and ensure compliance with:

    • Government sanctions
    • Anti-dumping rules
    • Quotas
    • General tariffs

2. Preferential Certificates of Origin

These certify goods for accessing benefits under free trade agreements (FTAs), such as reduced tariffs. You can apply for a preferential certificate if Australia has an FTA with the destination country. Customs authorities use it to verify compliance with agreements, tariff schedules, and Rules of Origin.

Listed below are some other types of export documents. You may need additional documents that aren’t included in this list, so be sure to check the requirements with your freight forwarder or customs broker:

An ATA (Admission Temporary Admission) Carnet is an international customs document that allows for the temporary entry of goods into other countries, exempting them from import duties and taxes. It’s typically used for high-value goods imported for specific purposes such as:

  • Cars, bikes, boats, caravans, or trailers for exhibitions and trade shows
  • Motorbikes, cars, and other vehicles used in motorsports
  • Equipment, trucks, and machinery for mining or farming
  • Cameras and other equipment used in filming and audiovisual production

Other high-value items like jewelry or vehicles for personal use may also qualify. Consumables and perishable goods are excluded. Goods can only remain in the country for up to 12 months.

Where to Get an ATA Carnet

To learn more and apply for an ATA Carnet, contact the Chamber of Commerce in your state or the Australian Chamber of Commerce and Industry (ACCI).

A Certificate of Free Sale (CFS), also known as an Export Certificate or Certificate of Export (CoE), certifies that:

  • You are legally allowed to sell your product in your own market without restrictions.
  • The product has the approval of the relevant authorities in your country.

Without a CFS, your buyer might not be able to import your product. This certificate may be required for customs clearance or the registration process for:

  • Food and food-based products
  • Medical devices and products
  • Complementary, prescription, and over-the-counter medicines
  • Biologicals

Where to Get a Certificate of Free Sale

Check with the relevant agency for application details:

To export certain products from Australia, a Certificate of Good Manufacturing Practice (GMP) may be required. GMP outlines practices and procedures for manufacturing food products, cosmetics, and pharmaceuticals to ensure they meet quality and health standards both in Australia and overseas.

Where to Get a Certificate of Good Manufacturing Practice 

To find out more and apply for a Certificate of Good Manufacturing Practice, visit the Therapeutic Goods Administration website.

For some goods, you may also need authentication from the Department of Agriculture, Fisheries and Forestry. 

If you’re selling agricultural and veterinary chemicals, check export requirements on the Australian Pesticides and Veterinary Medicines Authority (APVMA) website. 

A Certificate of Health is often required when exporting:

  • Animal products such as meat, fish, dairy, and eggs
  • Animal by-products such as skins, hides, and wool
  • Meat by-products such as pharmaceuticals, blood, and pet food
  • Plant products such as grain and horticulture

It certifies that the product meets the importing country’s requirements, ensuring it is fit for human consumption, correctly described and labeled, and traceable if necessary.

Where to Get a Certificate of Health 

Apply for a Certificate of Health through the Department of Agriculture, Fisheries and Forestry .

This certificate confirms the place of manufacture and includes information on ingredients, formulas, and manufacturing processes. It certifies that the product:

  • Meets all standards and requirements
  • Is complete or assembled
  • Is available and ready for sale

Where to Get a Certificate of Manufacture

Obtain a CoM template from the Chamber of Commerce in your state or the Australian Chamber of Commerce and Industry (ACCI).

If exporting organic or biodynamic products, an Organic Produce Certificate (OPC) is necessary to certify compliance with Australian export laws and those of the importing country. This certificate is required for any product labeled as:

  • Biodynamic
  • Biological
  • Ecological
  • Organic

Where to Get an Organic Produce Certificate

Apply for an OPC through Australian Certified Organics (ACO) or Department of Agriculture, Fisheries and Forestry

 

Some countries require a Phytosanitary Certificate for regulated goods such as plants, plant products, or other specified items. This certificate confirms that products:

  • Have been inspected and treated as required
  • Are free from quarantine and potentially dangerous pests
  • Comply with the regulations of the destination country

Where to Get a Phytosanitary Certificate

Apply through the Department of Agriculture, Fisheries and Forestry.

 

Requirements vary, so check carefully. If you don’t have the right documents when exporting, you could face fines and delays. If you aren’t sure, it is best to use an expert.

1.3. Product Classification: Commodity Codes, Tariffs, Taxes & Duties

1.3.1. Commodity Codes

Any goods imported into a country need a classification code specifying what the shipment contains. These codes are known as Commodity Codes.

They are reference numbers used by customs authorities worldwide to describe specific products.

Using the correct commodity codes is essential to pay the right tariffs and get your goods cleared at customs.

Follow these steps to classify your goods when exporting from Australia:

The type of code you need depends on where you are in the export process.

As an Australian exporter, you’ll need the AHECC code for your Australian export declaration.

Additionally, you’ll need the HS tariff code for the destination country. This helps you determine their import tariff rates and any benefits from free trade agreements.

    • HS Codes: Harmonised System (HS) codes are internationally recognised 6-digit codes used to classify imported and exported goods. They form the basis of other commodity codes. Countries may add extra digits to the end of HS codes for country-specific details. 
    • AHECC Codes: Australian Harmonised Export Commodity Classification (AHECC) codes are HS codes with 2 extra digits for Australian exports. You’ll need an AHECC code for your export declaration.
    • Tariff Codes: These are HS codes with additional digits for a country’s tariff system. You’ll need the tariff code for the country you’re exporting to, which helps determine tariffs and free trade agreement benefits.

Example – Green Pea Commodity Codes:

      • The HS code for dried and shelled green peas is 071310.
      • The AHECC code for exporting from Australia is 071310.27.
      • The tariff code will vary by destination: for Chile, it’s 071310.00; for India, it’s 071310.20.

To find the right commodity code, understand your product’s nature, composition, and intended use.

Use official resources to research commodity codes. You can find:

Compare your product to commodity code descriptions, considering materials, components, and intended use. 

Tip – Check for Changes to HS Codes: The World Customs Organisation periodically updates the HS codes. Customs authorities might use different versions, so check the World Trade Organisation’s HS tracker for changes.

Accurate codes are crucial to avoid delays, fines, or penalties. The Department of Foreign Affairs and Trade can confirm product classification under an advance ruling for free trade agreements.

1.3.1. Find Tariffs & Duties

A tariff, also known as a customs duty, is a fee imposed by a country’s customs authority on goods imported into that country. Tariffs vary depending on the type of goods and are listed in a tariff schedule identified by commodity codes.

Tariff Finder Tool: Use this tool to discover applicable tariffs, taxes, and trade remedies.

Preferential tariffs are available when two countries agree to charge a lower rate under a Free Trade Agreement (FTA).

To claim FTA preference, follow a specific process and comply with rules. Assess if your product qualifies for an FTA and what documentation you’ll need on the FTA portal.

FTAs can facilitate business and offer opportunities to discuss price points, volume predictions, and other marketing strategies.

If there’s no trade agreement with Australia or your product doesn’t qualify for a preferential tariff rate, the most favoured nation (MFN) tariff rate will apply.

The Tariff Finder Tool helps identify potential target markets and the steps required to enter them.

Markets may charge additional taxes or levies to control or affect the prices of imported goods. This varies depending on the product. For example, a market may introduce a tax to support domestic prices of a certain product.

→ Check for other taxes and fees in overseas markets, such as Value Added Tax (VAT). Check the worldwide tax summaries from PwC.

→ Charging Goods and Services Tax (GST)

Exports of goods and services from Australia are generally GST-free. If you’re registered for GST:

    • You don’t include GST in the price of your exports.
    • You can still claim credits for the GST in the price of purchases to make your exported goods and services.

Some circumstances require GST payment. Check the Australian Taxation Office guidance on exports and GST for details.

Reducing Import Taxes on Agricultural Exports

The Australian Government negotiates agreements to help agricultural trade, including reduced tariff rate arrangements for certain products. Exporters can get reduced import taxes on a certain volume of goods into a country, saving money for Australian exporters.

Regions with Quotas:

  • European Union and the United Kingdom (UK)
  • Indonesia
  • Japan
  • United States of America (USA)

The Department of Agriculture, Fisheries and Forestry (DAFF) administers quotas for Australia. DAFF issues certificates either through allocated quotas or a first-come, first-served (FCFS) basis. 

Exemptions from Import Duties Under the Tradex Scheme

The Tradex Scheme offers exemptions from paying import duties and some taxes for Australian businesses importing products intended for export. This includes products imported for processing, treatment, or manufacturing for sale overseas.

Example: An Australian business importing $100,000 worth of packaging from China benefits from the Tradex Scheme by being exempt from paying 5% import duties and 10% GST, allowing them to allocate savings towards their marketing and promotional budget.

ATA Carnet Exemptions for Import Duties and Taxes

An ATA (Admission Temporary Admission) Carnet is an international customs document allowing temporary entry of goods into other countries, exempting import duties and taxes. It is used for high-value goods imported for specific uses, such as exhibitions, motorsports, mining, or filming. Goods can remain in the country for up to 12 months.

Items Included:

  • Cars, bikes, boats, caravans, or trailers for exhibitions and trade shows
  • Motorbikes or cars and other vehicles used for motorsports
  • Equipment, trucks, and machinery for mining or farming
  • Cameras and other equipment for filming and audiovisual production

For more information and to apply for an ATA Carnet, speak to the Chamber of Commerce in your state via the Australian Chamber of Commerce and Industry (ACCI).

Step 2: Set Export Pricing

Getting your export pricing right is crucial for your business. Incorrect pricing can lead to:

  • Setting your price too low, reducing your margins and profits, or
  • Setting your price too high, losing sales and trust in the market.

→ Follow these steps to set up your export pricing:

Incoterms® clarify your role, responsibilities, and risks when trading internationally. It’s essential to understand them before selling to overseas buyers. The Incoterms® you agree with your buyer will affect your export costs, profits, and margins. 

Read about Incoterms® here.

Calculating export costs can be complex, with many factors affecting these costs and your profit margins.

  • Product Costs: Ensure your product costs, or cost of goods, are accurate. This includes all expenses related to manufacturing or production, such as machinery, equipment, utilities, staffing, and other business-related costs. Use this as a base to determine your export pricing.

  • Export Expenses: Export costs include more than just shipping. Remember to account for:

    • Export-related training or seminars
    • Attending events and tradeshows or travel to meet prospective buyers
    • Agent, broker, and distributor commissions and fees
    • Tariffs and taxes
    • Export documentation and certifications

Each market is different, and expenses may vary between countries. Research your preferred market to understand the costs involved.

Tip – Include Costs of Partners: Factor in the costs of all your channel partners, as they will affect your margins. Also, check if you can benefit from any Free Trade Agreements (FTAs). FTAs can facilitate business and provide opportunities to discuss market strategies with your customer or partner.

Read more about Export Costs here.

Channel partners often request discounts or other incentives. Discounting can significantly impact your margins and profits, so consider all discounts, incentives, and price reductions when setting your lowest price point.

Common Types of Discounts:

  • Bulk or Volume Purchase Discounts: Buyers may ask for a price reduction for larger quantities, boosting cash flow and moving more product.
  • Early Payment Discounts: Some buyers may request a cash discount for early payments, helping manage cash flow but affecting margins.
  • Event or Seasonal Discounts: Demand increases around key events like Christmas or summer sales. Buyers may expect annual discounts.
  • Free Shipping Discounts: Offering free shipping can increase sales and reduce cart abandonment. Buyers may ask you to reduce prices to provide free shipping without affecting their margins.
  • Ongoing Discount Percentages: Large retailers often use Every Day Low Prices (EDLP), asking suppliers to reduce their prices to protect their margins.
  • Trade Discounts: Buyers who sell through wholesalers and retailers request trade discounts to add wholesale markups and offer lower prices to their customers.

Understand the difference between margins and markups to avoid affecting your reverse pricing analysis and set accurate prices.

  • Margins: The amount of revenue earned after deducting the cost of goods sold (COGS).
    • Calculated as: (Revenue – COGS) / Revenue = Margin.
  • Markups: The amount added to the cost of a product to determine the selling price.
    • Calculated as: (Revenue – COGS) / COGS = Markup.

A pricing strategy helps set the right price for your export business, increasing profits and reducing losses.

Common Pricing Strategies:

  • Cost Plus Pricing: Calculate all costs to get your product to the consumer, then add a margin. Agree on the margin and Incoterms® with the buyer beforehand.
  • Competitive Pricing: Set your price at or below your main competitors. This strategy is beneficial if your margins allow profit, especially when new to the market.
  • Demand-Based Pricing: Also called top-down or reverse pricing. Start with the price based on competitors’ products and work backwards, factoring in costs and export expenses.
  • Premium Pricing: Implies top-quality or exclusive products. Justify inflated prices realistically based on consumer and sales data.

Structure or revise your pricing strategy for each market you enter. Research and get expert advice before setting your pricing strategy. Update your export plan once you decide on your strategy.

Decide on your pricing strategy and calculate your export pricing using these two main methods:

  • Cost Plus Pricing: Add a margin to your cost of goods to determine your selling price. Start with your factory costs and calculate all costs based on the agreed Incoterms® with your buyer. Download the Cost Plus pricing template from the Australian Government to assist with this calculation.

 

  • Demand-Based Pricing: Start with the end-user price based on market demand and work backwards, factoring in costs and agreed Incoterms® until you reach your factory price. Download the Demand-based pricing template to assist with this calculation.

Step 3: Draft an export contract

Follow these steps to draft an export contract:

  • Ensure your product can be legally imported into your preferred market. Check Understand Market Access if you have skipped that section.
  • Include compliance information in your contract, such as accreditations and certifications.
    • Compliance clauses for export contracts include:
      • Local Regulatory Standards.

Depending on the market, you may need to provide evidence of your product’s:

        • Country of origin

        • Product safety standards

        • Certifications

        • Warnings and correct labelling

        • Testing conducted

        • Accreditation

        • Registrations

        • Approvals

Your buyer should be able to supply the details of these local regulatory standards. If they are unclear on their local standards, question whether they are suitable to represent your brand. 

      • Export Documentation. 

        Customs offices typically require specific documentation to clear goods for export or import. You will usually need to provide these documents when shipping your product.

        Check with your buyer to determine exactly which documents are needed. Clearly outline in your contract who will provide which documents to ensure legal compliance and customs clearance.

Check Export Declarations & Certifications​.

      • Insurance

        Ensure you have adequate insurance policies to cover all business-related aspects, such as:

        • Product liability insurance

        • Professional indemnity insurance

        • Marine cargo or cargo and transit insurance

        Include information about each party’s required insurances in your contracts. This adds clarity to expectations and responsibilities. Proof of insurance often forms part of compliance or quality assurance requirements.

      • Quality Assurance (QA)

        QA ensures products meet certain baseline standards applicable in both domestic and international markets.

        QA standards will vary depending on your product and the market you are exporting to. You cannot rely solely on meeting domestic market requirements.

        If your product is manufactured offshore, conduct a QA inspection before shipping each order. Some offshore manufacturers may send correct samples initially, but different or inferior products in subsequent orders.

  • Understand Incoterms® and your obligations for transactions and shipping.
  • Find out your buyer’s preference for Incoterms® before negotiating the contract.
  • Be clear on your export pricing, your break-even figure, and the lowest price you are willing to accept.

Ensure clear agreements during negotiations and include specific details in the written contract. Be fair and protect yourself by understanding all terms.

Importance of Contract Terms

Contract terms outline the rights and obligations of the parties. If a dispute arises, the written terms serve as the primary source of truth.

Both parties may present standard terms, necessitating specific agreements outside these terms. Be cautious of blanket inclusions of buyer terms and understand all referenced documents, especially legal ones.

Standard Terms and Conditions:

Parties to a contract are typically free to choose the laws they wish to apply to their contract. Both the buyer and the seller usually prefer the laws of their own country, but they could agree to apply the laws of a third country. Without a specific choice, the laws of the country most closely connected to the contract will apply.

You may also include a clause to clarify which country’s jurisdiction will apply in case of legal issues. Buyers usually prefer their own country’s courts to handle disputes.

Choosing arbitration as a method of dispute resolution can be a good compromise, especially if the target market is less developed, has high corruption levels, or an inefficient court system.

The ‘terms’ of a contract refer to its duration of validity. Most exporters prefer a one-year term for distribution agreements, subject to annual renewal.

Distributors, however, prefer longer terms as developing a market can take several years to become viable. They do not want their territory or product rights taken away too early.

Work with your distributor on the contract length. Ensure that long-term agreements include specific performance measures. This allows you to terminate the contract early if the distributor fails to meet sales targets.

For example, agree that the distributor will sell a specified amount or value of goods within a defined timeframe. If they fail to achieve this target, you can end the agreement.

If targets or performance measures cannot be agreed upon, consider a short-term contract, which can be extended or renewed as you become more comfortable with your buyer and the process.

Retention of Title (ROT) means you retain legal ownership of the goods until the buyer fulfils certain contractual obligations, usually payment for the goods.

There are two types of ROT:

  • Specific Goods Clause: Legal ownership of the goods does not pass to the buyer until they have paid for them.
  • All Monies Clause: Legal ownership of the goods does not pass until the buyer has paid all outstanding invoices. This is usually included where an open account or open credit payment term is in place with your buyer.

When deciding on a warranty for your product, research what your competitors offer and aim to provide something similar or more appealing. Warranties are part of your brand and sales offer to your buyer.

The buyer will handle customer warranty claims, representing you and your brand in the market. They must respond to claims and provide replacement items to customers, which you will reimburse.

Consult a lawyer familiar with the buyer’s local market laws to decide on a warranty. Manufacturer and importer warranties may apply under consumer protection laws.

Disputes can arise for various reasons, including:

  • Defective or damaged goods
  • Receiving incorrect products
  • Incomplete shipments
  • Late or undelivered goods

Most agreements provide a dispute resolution procedure.

For simple disputes, an independent expert may settle the issue. For complex disputes, a professional mediator may be required.

If mediation fails, the contract may specify arbitration or designate particular courts for adjudication.

Negotiating performance targets is challenging but necessary for every export contract. Include reasonable performance criteria for the distributor, specifying sales targets (in dollars or units) for each year of the agreement. Clearly state the consequences of failing to meet these targets, such as:

  • Formal consultation
  • Reducing the size of their territory
  • Loss of exclusivity
  • Termination of the contract

Other terms to consider:

  • Forecasts: Require a rolling 12-month forecast of anticipated requirements, updated quarterly.
  • Sales Reports: Require quarterly sales reports, with a template attached to the agreement.

Ensure the contract clearly states the rights and obligations around termination, including the continuation of selling unsold stock for a specified time or the option to buy it back. Decide whether you have the option or obligation to repurchase unsold stock and at what price.

  • Pricing: Attach your current pricing schedule, including discounts, to the agreement. Specify the notice period for price changes and how often they can occur (e.g., once a year with 30 days’ notice).
  • Currency: Decide who will bear the exchange rate risk. Consult your bank about managing foreign exchange rates. Some countries have firm currency controls, requiring contracts to be denominated in local currency.
  • Payment Terms: Work with your buyer to decide on payment terms, including the agreed payment method and any specific terms. Ensure the buyer is responsible for all bank charges to receive the full invoiced amounts.
  • Shipping Terms: Include agreed Incoterms® in your contract, factoring them into your pricing and payment methods. Add specific delivery instructions and processes for delays or force majeure, including fines for late delivery or procedures for damaged products.

Read more about Payment Terms here.

  • Product Rights: Some buyers, typically distributors, want exclusive rights to all products under your brand. Consider including a term for product rights and exclusivity, ensuring the distributor can sell using their own resources and channels.
  • Territory/Exclusivity: Distributors often demand exclusive rights for large territories. Gradually expand the territory based on their sales performance. If their sales reach a certain level within a defined timeframe, grant exclusivity for the larger territory. Remember, exclusivity can go both ways—request that the distributor cannot sell competitive products.
  • Restraint of Trade: Require the distributor to refrain from marketing competitive products in exchange for exclusivity. Clearly define a ‘competitive product’ and include key details such as similar design, function, purpose, or customer base. A post-termination restraint can cover the restraint of trade for a specified time after the contract ends.
  • Intellectual Property: Your brand is part of your intellectual property (IP). Trademarking your brand protects against misrepresentation and potential damage. Register your IP in Australia and other target markets, and include ownership and usage details in your contract.
  • Branding: Specify whether you will use your brand or the buyer’s/distributor’s brand. It is recommended to use your own brand. Include brand guidelines to ensure consistency.
  • Marketing and Promotion: Agree on the percentage of sales the buyer will use for advertising and promotion. Detail the figures and activities in your contract. Require an annual marketing plan from your distributor, which can be adjusted as needed.

Localisation refers to adapting elements of your product or service for market suitability or compliance, such as:

  • Changing product, ingredient, or warning labels
  • Editing or translating manuals and documentation
  • Converting weights and measures

This is typically the buyer’s responsibility, but you should provide support as needed.

A distributor may request a right of first refusal on new products, applications, or territories. This means negotiating with them first before approaching other buyers. This can delay market entry, so granting rights of first refusal is generally not recommended.

If your distributor relies on sub-distributors, they may not effectively manage their territory. It is often better to deal directly with potential sub-distributors or find another distributor in the area. Consider including a term that prevents the use of sub-distributors or a performance target term to review and re-negotiate if necessary.

  • Product Purchasing Process: Detail the ordering process in the contract. Include an order form with necessary details like purchase order number, date, product description, quantity, price, payment details, shipping instructions, required date, and signature.
  • Product Order Terms: State terms and conditions for purchase orders, such as time limits between order placement and processing, lead/processing times, minimum order size, and amendment/cancellation policies.
  • Shipping Terms: Include agreed Incoterms® and specific delivery instructions in the contract. Outline processes for delays, force majeure, and terms like fines for late delivery or product damage.
 

 

Finalise the Contract

After negotiations and preparing a draft contract, have a qualified lawyer review it to ensure enforceability. Find a law firm with expertise in international trade and the laws of the target market.

Step 4: Freight & Logistics

The type of goods being shipped plays a crucial role in selecting the right transport mode. 

  • Perishable Items: Require specialised transport to control temperature throughout the journey. Temperature-Controlled or ‘Reefer’ Containers maintain the right temperature range to preserve the quality of perishable goods.
  • Fragile Items: Need special care to prevent damage. Choose a transport mode with gentle handling to minimise vibrations.

Tip – Consider Climate Impacts Consider climate changes from Australia to the destination. Assess whether your product can withstand humidity or temperature shifts during transport. Evaluate climatic conditions along the shipping route to determine suitable packaging and transport methods.

4.1 Logistics Options

Shipping to target markets and consumers can be challenging. Tailor your shipment solution to your circumstances and customers.

→ Here are some options: 

When using direct shipment, you must fill purchase orders for each overseas customer order.

This method is ideal if you’re testing a new market or want to deal directly with consumers, retaining control over your brand. However, direct shipment may not be practical for some products or markets due to unreliable postal and customs clearance processes for parcels. Additionally, direct shipment is not feasible for certain items, such as food.

Pros:

    • Full control over stock
    • No need for a distributor
    • Potential to take advantage of tax-free thresholds in some countries

Cons:

    • High freight and labour costs
    • Risk of product loss and damage
    • Longer wait times for consumers

Many exporters and importers use warehouses to store products until they are ready to ship or sell to customers. This process, known as third-party logistics (3PL) warehousing, involves storing goods that have arrived at their destination until they are ready for transportation to the buyer. This may involve bulk delivery of the entire shipment or separation into smaller units for end customers.

3PL warehousing is commonly used by e-commerce businesses and can often be seamlessly integrated into a business’s e-commerce platform. 

Pros:

    • Cheaper bulk shipment
    • Faster delivery speed
    • Scalable services

Cons:

    • Requires long-range sales predictions
    • Higher risk of waste if the product expires
    • High storage fees if turnover is slow

To promote overseas e-commerce, some countries have established regions known as Free Trade Zones. Using this model, you can send containers into a Free Trade Zone and benefit from:

  • Certificate-free, tax-free thresholds
  • Bonded policies for selected items

If you use this method, you need to find a local service provider to manage shipment and last-mile logistics.

Pros:

    • Lower logistics and taxation costs
    • Fewer import regulations on some items
    • Faster consumer delivery speeds

Cons:

    • Risk of changing policies and regulations
    • Potential loss of control over stock
    • No ability to facilitate returns

4.2. Analyse Transport Within the Destination Country

The complete journey of your export shipment involves not just transport from Australia to the destination country, but also delivery to the specific location within that country.

When evaluating the final destination’s location, consider the practicality of:

  • Transport from Port of Entry

If your final destination is deep inland, far from the port of entry, determine the most efficient and cost-effective way to transport your goods. There are two main options: inland transport or air travel.

  • Inland Transport

Involves moving goods from the port to the inland destination via road, rail, or a combination of both. This method is suitable when the distance is manageable and there is a well-established transport infrastructure.

  • Direct Air Travel from Australia

Air travel directly from Australia may be a viable option if:

    • The final destination is located deep inland
    • There are logistical challenges with road or rail transport

Although air freight can be more expensive, it ensures faster delivery to the final destination.

4.3. Other considerations

  • Destination.

 Consider:

    • Distance to the destination
    • Local regulations and infrastructure (ports, airports, road networks)
  • Cost Versus Security.

Balance cost-effectiveness with the need for speed or security. Negotiate with freight service providers for cost-saving measures like bulk discounts, contract rates, or freight consolidation services.

  • Transit Times.

Transit time varies by transport method. Air travel is fastest but most expensive. Sea freight is slower but cheaper, suitable for products with a longer shelf life. Ensure the delivery timeframe meets customer expectations and contractual obligations.

  • Reliability.

Choose reliable service providers to ensure goods are delivered undamaged and on time. Research their track record and check testimonials. Reliable providers should prioritise the safe handling of shipments.