Discusses pricing formula and other fees, value-added tax (VAT), etc
The market in Thailand is open and very competitive. U.S. firms should study factors such as the channels of distribution, necessary sales and promotional techniques, and the current pricing practices of key competitors. Standard credit payments apply in Thailand as well.
Importers of large equipment or machinery charge a commission of 5–10% and allow their customers to open a letter of credit themselves. Manufacturers or wholesalers normally receive a 5–10% profit margin. Retailers and distributors of local products require a 25–35% margin. There is also a 7% VAT charge on consumer goods.
Thai consumers are very price conscious. In fact, less than half of Thai consumers report buying based on brand-name recognition, and first time buyers often buy on price alone. Consumers are often offered free gifts or extra options with their purchases. In addition, midnight sales and one-off promotions have proven to be quite successful. Retailer’s pricing depends on the product and the frequency of turnover. In general, the margin structure is as follows:
- Convenience Stores 18-20%
- Discount Stores 8-10%
- Department Stores 40%
- Manufacturers or Wholesalers 5-10%
- Distributors of Local Products 10-15%
- Direct sale of specialty products 60-80%
- Direct sale of general products 40% maximum
- Importers of large equipment or machinery 5-10%
- Importers of luxury products 60% minimum