CBI provides a detailed table for analysing the price structure of the imported jeans in the EU. Basically, this table helps to find how the retail prices of the jeans can be approximately derived from the CIF prices of the jeans at which they arrive in EU. The jeans , after they arrive , add various kinds of costs which are reflected in their final retail price. However, due to market segmentation, the table is divided into three categories under which jeans might be sold. These are the Low, Medium and High segments of the market. The wholesaler and retail margins vary significantly under these different segments – thus causing a different ratio of retail price to the CIF cost . The starting index is taken as 100 and different costs are added as % to this base index.
Price Structure Of Jeans In EU
|-handling charges, transport,Insurance, banking services||8||8||8|
|Retailer’s Margin (40/60/75%)||54||86||122|
|– net selling price||189||230||284|
|VAT (19% of net selling price)||36||44||54|
|Gross selling or consumer price||225||274||338|
|Ratio CIF/Consumer Price||2.2||2.7||3.4|
- Import tariffs( 0-12%) are not included in this calculation. The ratios will change a little when the tariffs are incorporated for individual countries.
- VAT is taken for Netherland and will be different for different countries.
Thus we can see that the ratio of retail prices varies from 2.2 times to over 3.4 times the CIF value of the jeans into EU. This could vary a little when we consider the additional factors of duty and different VAT structures. However, it helps us to have an approximate idea of how the price structure of denim jeans is done in EU. For more details, visit the CBI Market Info and download the report from there.