I recently purchased a part from a Canadian forum member and learned a lesson about exchange rates, import costs, and negotiating the actual delivered price.
First, the seller did nothing wrong. I decided the part was worth US$200, offered US$200, and he accepted. I own the result.
The first sting came when PayPal showed what my payment meant on his side of the border: US$200 became C$271.53. That was when I realized I had given away the purchasing-power advantage of the U.S. dollar. I had decided what the part was worth in my economy and then handed the seller that entire amount in U.S. currency without first considering its substantially greater value in Canadian dollars.
The second sting came when FedEx billed me another US$66.32 in duties, taxes, and import-related fees.
My US$200 part had now cost me US$266.32 delivered.
Before anyone responds that these were U.S. import charges: yes, I understand that. I was the importer, and the charges resulted from bringing the part into the United States. That is not the point. Shipping, exchange rates, duties, taxes, and carrier fees are all costs required to complete an international transaction. Regardless of which government imposes a charge or which party receives the invoice, its economic impact can—and should—be considered when negotiating the deal.
Had I handled this correctly, I would have worked backward from the US$200 delivered value I had placed on the part. I would then have estimated the import charge and negotiated with the seller over how much of that cost each of us was willing to absorb.
For example, we might have agreed to split the anticipated US$66.32 charge. The seller would have been entirely free to decline. At that point, we would simply have learned that there was no price at which the transaction made sense for both of us.
My advice to other U.S. buyers is straightforward:
Do not decide that a Canadian part is worth US$200 and automatically offer US$200. Do not simply give away the value of the U.S. dollar.
Negotiate in Canadian dollars. Decide what the item is worth delivered to your door. Estimate the shipping and import costs. Then determine whether those costs will be paid by you, paid by the seller, or reflected through an agreed reduction in the purchase price. Also, confirm who FedEx will bill before the package ships. “Shipping included” does not necessarily mean duties, taxes, brokerage, and import fees are included.
Again, this is not criticism of the seller. He accepted the offer I made. My mistake was negotiating the sale price first and discovering the economics of the international transaction afterward.
First, the seller did nothing wrong. I decided the part was worth US$200, offered US$200, and he accepted. I own the result.
The first sting came when PayPal showed what my payment meant on his side of the border: US$200 became C$271.53. That was when I realized I had given away the purchasing-power advantage of the U.S. dollar. I had decided what the part was worth in my economy and then handed the seller that entire amount in U.S. currency without first considering its substantially greater value in Canadian dollars.
The second sting came when FedEx billed me another US$66.32 in duties, taxes, and import-related fees.
My US$200 part had now cost me US$266.32 delivered.
Before anyone responds that these were U.S. import charges: yes, I understand that. I was the importer, and the charges resulted from bringing the part into the United States. That is not the point. Shipping, exchange rates, duties, taxes, and carrier fees are all costs required to complete an international transaction. Regardless of which government imposes a charge or which party receives the invoice, its economic impact can—and should—be considered when negotiating the deal.
Had I handled this correctly, I would have worked backward from the US$200 delivered value I had placed on the part. I would then have estimated the import charge and negotiated with the seller over how much of that cost each of us was willing to absorb.
For example, we might have agreed to split the anticipated US$66.32 charge. The seller would have been entirely free to decline. At that point, we would simply have learned that there was no price at which the transaction made sense for both of us.
My advice to other U.S. buyers is straightforward:
Do not decide that a Canadian part is worth US$200 and automatically offer US$200. Do not simply give away the value of the U.S. dollar.
Negotiate in Canadian dollars. Decide what the item is worth delivered to your door. Estimate the shipping and import costs. Then determine whether those costs will be paid by you, paid by the seller, or reflected through an agreed reduction in the purchase price. Also, confirm who FedEx will bill before the package ships. “Shipping included” does not necessarily mean duties, taxes, brokerage, and import fees are included.
Again, this is not criticism of the seller. He accepted the offer I made. My mistake was negotiating the sale price first and discovering the economics of the international transaction afterward.
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