Be Honest: Do You Know Your Exact Cost of Goods?
Many business owners who have been selling locally for years can't answer this question precisely: "What is your exact cost per unit?"
In domestic markets, you can get away with rough estimates. In export, you can't. Because if you don't know your real cost, you can't:
- Quote a price that's actually profitable
- Know whether an order is worth taking
- Negotiate confidently when a buyer tries to push your price down
Step 1: Calculate Your Cost of Goods Sold (COGS)
COGS is everything you spend to produce one unit of your product. It typically includes:
Raw Materials The cost of every material that goes into one unit, including main materials, supporting materials, and basic packaging.
Direct Labor The wages paid to produce one unit. If you pay workers per piece, this is straightforward. If you pay monthly salaries, divide total monthly wages by the number of units produced per month.
Factory Overhead Electricity, water, facility rent, machine maintenance divided by monthly production volume.
Simple Example:
| Component | Cost Per Unit |
|---|---|
| Raw materials | Rp 45,000 |
| Direct labor | Rp 12,000 |
| Factory overhead | Rp 8,000 |
| Total COGS | Rp 65,000 |
Step 2: Add All Export-Specific Costs
This is what new exporters most often forget. Export costs go far beyond just ocean freight.
Export Packaging Export packaging must be stronger than domestic packaging (reinforced cartons, bubble wrap, wooden pallets). This adds Rp 3,000-15,000 per unit depending on your product.
Certifications Depending on your product and destination country, you may need halal certification, phytosanitary certificate, SNI standard compliance, or lab testing. Divide these costs across your total export volume.
Export Documentation Export declaration (PEB), Certificate of Origin, and other documents. Typically Rp 500,000-2,000,000 per shipment.
Inland Trucking to Port From your warehouse to the departure port. Get quotes from at least 3 freight forwarders to compare.
Ocean Freight Depends on cargo volume, weight, and destination port. Your freight forwarder will provide this.
Cargo Insurance Typically 0.2%-0.5% of cargo value. Don't skip this. If goods are damaged or lost without insurance, the loss is yours entirely.
Step 3: Set a Selling Price That Makes Sense
Once you know your total cost, add your profit margin. For export, a minimum of 15-20% above total cost is a safe target to cover currency risk, potential returns, and unexpected costs.
Complete Example:
| Component | Per Unit |
|---|---|
| COGS | Rp 65,000 |
| Export packaging | Rp 8,000 |
| Certification (divided) | Rp 2,000 |
| Export documents (divided) | Rp 1,500 |
| Trucking (divided) | Rp 3,000 |
| Ocean freight (divided) | Rp 15,000 |
| Insurance (divided) | Rp 1,500 |
| Total cost | Rp 96,000 |
| 20% margin | Rp 19,200 |
| FOB Selling Price | Rp 115,200 |
If today's USD/IDR rate = Rp 15,800, your FOB price in USD = $7.29 per unit.
Why This Matters Before You Negotiate
When you know these numbers, you can negotiate with confidence. You know exactly where your floor price is: the minimum price below which you'd lose money. You know when an offer makes sense and when to walk away.
Without this data, you're guessing. And guessing in export can turn into real financial losses.
