How to Price Your Product Right in the UAE Market: Deep-Dive

The UAE is a global business hub with unmatched opportunities. From perfect location to tax-friendly policies, here’s why and how you should launch in this thriving market.

Here’s where many Indian founders stumble when expanding to the UAE: pricing. It’s not that they don’t know their costs- it’s that they often don’t grasp how pricing works on an international stage.

We’ve seen talented entrepreneurs with amazing products either price themselves way too high and lose customers, or go too low, which makes buyers question whether their product is even trustworthy. The truth is, pricing for a new market like the UAE is much more than just converting rupees to dirhams and slapping on a margin. There’s a whole strategy behind it.

In the following sections, we’ll break down how to build a pricing strategy so you don’t just enter the UAE market, but thrive in it!

How Shipping Terms Affect Your Product Pricing?

Before getting into pricing, it’s super important to wrap your head around Incoterms (International Commercial Terms). These are basically the official shipping terms that clarify who is responsible for what along the supply chain from the moment your product leaves your factory to when it lands in the customer’s hands.

Why is this important? Choose the wrong Incoterm, and suddenly you could be on the hook for expensive customs fees, damaged goods, or delayed deliveries that you didn’t plan for- costs that can throw your entire pricing and profit calculations off balance.

Here are the four Incoterms that every Indian founder looking to enter the UAE market should get familiar with:

1. EXW (Ex Works)

This is the most basic Incoterm, where the seller’s responsibility ends as soon as the goods leave their factory or warehouse. That means the buyer handles everything else from loading, shipping, customs, to delivery.

For founders exporting to the UAE, this can mean more hassle and cost on your buyer’s side, but less risk for you. However, this might complicate deals if you don’t have strong logistics partners or your buyers aren’t set up for international shipping. EXW quotes are often just the starting point for negotiations. Be prepared to offer other terms.

When to use it: For initial quotes when you're still testing the waters, or when dealing with very experienced importers who prefer to control the entire logistics chain.

2. FOB (Free On Board)

With FOB, the seller takes on a bit more responsibility than EXW. The seller is responsible for loading the goods onto the ship or plane at the port of origin. Once the goods are on board, the risk and costs transfer to the buyer.

For founders exporting to the UAE, FOB means you handle export clearance and loading, which gives your buyer some peace of mind knowing the product safely leaves your hands. But from then on, the buyer manages shipping, insurance, and import.

Most UAE importers are comfortable with FOB terms. This shows that you're serious about exporting but not trying to control every aspect of their business.

Best for: Sea freight shipments, which are how you'll ship most products to the UAE unless they're high-value or time-sensitive.

3. CIF (Cost, Insurance, Freight)

This Incoterm means the seller takes on more responsibility and costs. The seller arranges and pays for shipping, insurance, and freight to get the goods to the buyer’s port in the UAE. The risk transfers to the buyer only once the goods arrive at that port.

For Indian founders, CIF can be a convenient option because it means you control the shipping process and costs upfront. It also reassures buyers since insurance is included, reducing their risk.

CIF pricing often allows you to negotiate better freight rates because you're consolidating shipments. You can pass some of those savings on to your customers while keeping better margins.

When to use it: When you want to provide a more complete service, or when your buyers are smaller companies that prefer predictable, all-inclusive pricing.

4. DDP (Delivered Duty Paid)

This is the most seller-friendly Incoterm. The seller handles everything- shipping, insurance, customs clearance, duties, and delivery to the buyer’s doorstep in the UAE. The buyer just waits to receive the product.

For Indian founders, DDP means full control and responsibility for the entire delivery process, including all fees and paperwork. It’s great for providing a smooth, hassle-free experience for your customers, but it requires strong logistics partners and careful cost planning.

DDP requires you to understand UAE customs, have local partners, and build significant logistics expertise. Don't offer this unless you're prepared to deliver on it consistently.

When to use it: When you're selling high-value products, have established local partnerships, or are targeting customers who value convenience over cost savings.

How to create a Pricing Strategy for the UAE Market?

1. Research your Platform

Before you set any prices, you need to understand what you're competing against.

• Online marketplaces: Check Amazon.ae, Noon.com, and other platforms. What are similar products selling for? How are they positioned?

• Physical retail: If possible, visit UAE stores (or have someone do it for you). Retail prices tell you about customer expectations and the competitive landscape.

• B2B pricing: If you're selling to businesses, understand that UAE B2B buyers often expect different pricing structures than Indian ones.

Don't forget that UAE customers are used to international brands. Your pricing needs to make sense in that context, not just compared to Indian domestic prices.

2. Build Your Pricing Framework

Here's the formula that's worked for most founders:

• Calculate true landed cost (including all hidden costs above)

• Add your margin (typically 25-40% depending on product category)

• Add distributor/retailer margins if applicable (15-30%)

• Compare to competitive pricing and adjust if necessary

• Build in a buffer for unexpected costs (5-10%)

3. Optimise Your Currency Strategy

AED is pegged to USD, so it's relatively stable. However, the Indian rupee isn’t. So, here are some ways you can manage currency risks:

• Quote in AED for smaller deals, USD for larger ones. Most UAE businesses are comfortable with both.

• Shorter payment terms reduce your currency risk. When the currency fluctuates, 30-day terms are better than 60-day terms.

• If you're doing significant volume, consider currency hedging through your bank. But for most founders starting out, focus on shorter payment cycles instead.

4. Position Your Price

Pricing affects how your customers see your brand. The price you choose tells a story: Are you the affordable option? The premium choice? Or somewhere right in the middle?

What works in India might not work in the UAE because consumer expectations, spending habits, and perceptions of value can differ. Positioning your price effectively means balancing all these factors- product quality, customer mindset, competitor prices, and your own business goals, to find a spot where your offering feels just right.

Premium vs. Value Positioning

• Premium positioning: Works if you have genuine differentiators: better quality, unique features, or a strong brand story. UAE customers will pay for a premium, but they expect premium quality.

• Value positioning: Compete on price, but don't race to the bottom. Focus on "better value" rather than "cheapest option."

• Middle positioning: Often the hardest to maintain, but it can work if you clearly communicate your unique benefits.

Market-Specific Considerations

• Indian community in UAE: Often price-sensitive but brand-loyal. They appreciate products from home but expect international quality standards.

• Western expatriates: Quality and convenience matter more than price. They're used to premium pricing for quality products.

• Arab Nationals: Often prefer premium positioning along with quality, authenticity, and brand heritage.

• Business customers: Focus on ROI and efficiency rather than just unit cost. B2B buyers think differently from consumers.

How to Calculate Your True Landed Cost?

When selling products internationally, the price tag is just the beginning. To truly understand what it costs to get your goods into customers’ hands, you need to calculate the true landed cost. This means factoring in every expense along the way, from manufacturing and shipping to customs duties, taxes, insurance, and local delivery fees.

So get this number right! It helps you set prices that cover your costs, protect your margins, and avoid nasty surprises that eat into your profits. In this section, we’ll break down how to calculate your true landed cost for the UAE market.

Base Cost Components

• Product cost: Manufacturing + packaging. Straightforward, but make sure you're factoring in UAE-specific packaging requirements.

• Export documentation and certification fees: ESMA certification, CoC, export licenses. Budget ₹5,000-₹25,000 per product line, depending on complexity.

• Freight charges: Sea freight is cheaper but takes 15-20 days. Air freight is faster but expensive. Factor in seasonal variations as freight rates spike during peak seasons.

• Insurance: Typically, it is 0.1-0.5% of the cargo value. Don't skip this. Even one damaged shipment can wipe out months of profit.

The Hidden Costs

• UAE customs duty: Usually 5% of CIF value, but verify for your specific product category. Some products have different rates or exemptions.

• UAE VAT: 5% of (CIF value + customs duty). This is straightforward math, but it is often forgotten in initial calculations.

• Customs clearance fees: Budget $200- $500 per shipment for documentation and clearance services.

• Local transportation in UAE: From port/airport to final destination. Costs vary significantly between Dubai, Abu Dhabi, and other emirates.

Miscellaneous Costs

• Currency fluctuation buffer: While the UAE dirham (AED) is pegged to the US dollar, the Indian rupee (INR) is more volatile. This means exchange rates can shift unexpectedly, affecting your costs and profits. To protect yourself, it’s wise to build in a 3-5% buffer in your pricing to absorb these fluctuations without eroding your margins.

• Demurrage and detention: If your shipment gets delayed at customs or you're late picking up containers, these fees add up fast. So, factor them into your pricing and plan your logistics carefully to avoid them.

• Return logistics: Sometimes shipments get rejected. It’s important to clarify who covers the cost of sending these goods back, whether you or your buyer, and include potential return shipping fees in your overall pricing model.

• Local partner margins: If you’re working with distributors, agents, or retailers in the UAE, remember they will expect a margin for their services. Typically, this ranges from 15% to 30%, depending on the industry and agreement.

Common Pricing Mistakes

Mistake #1: Underpricing

We've seen founders price their products 30-40% below competitive products thinking it would guarantee success. It resulted in customers questioning quality, while the brands couldn't afford proper customer service or marketing.

So, price competitively but not substantially below market rates unless you have a genuine cost advantage.

Mistake #2: Not Factoring in Hidden Costs

Quoting FOB instead of EXW, ignoring customs delays, and skipping insurance costs are small mistakes that can quickly drain your margins.

Build comprehensive cost models and always include buffers for unexpected expenses.

Mistake #3: Ignoring Local Partnership Costs

Your UAE distributor needs to make money, too. They won't prioritise your products if you don't leave room for their margins.

Understand the entire value chain and price your product accordingly.

Mistake #4: Fixed Pricing Despite Currency Fluctuations

Locking in prices for a full 12 months when the Indian rupee is constantly fluctuating can be a risky move. Currency swings can significantly affect your costs and profits, especially when dealing with international markets like the UAE. If the rupee weakens during that period, your expenses might rise unexpectedly, squeezing your margins.

Either build in currency buffers or include currency adjustment clauses in longer-term contracts.

Pricing for the UAE Market: Checklist

Before You Quote

• Map your complete cost structure, including all hidden costs

• Research competitive pricing across multiple channels

• Choose appropriate Incoterms based on your capabilities and buyer preferences

• Build in appropriate margins and buffers

• Test your pricing with a few potential customers before committing

When You Quote

• Be clear about your Incoterms and what's included

• Provide pricing validity periods (usually 30-60 days)

• Explain your value proposition beyond just price

• Include payment terms that work for your cash flow

• Build in flexibility for volume discounts or long-term partnerships

After You Start Selling

• Track your actual costs vs. projected costs

• Monitor competitive pricing and adjust as needed

• Review and adjust based on market feedback

• Optimise your Incoterms as you gain experience

The Bottom Line

Pricing for the UAE market is both art and science. The science is getting your cost calculations right, while the art is positioning your price in a way that reflects your value and appeals to your target customers.

We've seen great products fail because of poor pricing strategy, and average products succeed because their pricing was spot-on. It's that important. Take the time to understand Incoterms, calculate your true costs, research your competition, and position your pricing strategically.

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Pricing can be such a headache- hopefully, we’ve covered all the essentials for the UAE market here. Next up, we’ll tackle another crucial piece of the puzzle: logistics. Stay tuned!

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