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News > FOB > How to calculate FOB prices and FOB considerations
FOBDedicated line
How to calculate FOB prices and FOB considerations
Release time:2024-01-25

The calculation formula for FOB price is as follows:
FOB price=cost of goods+freight to the port of shipment (e.g. FCL, trailer+customs declaration+ocean freight surcharge)
Among them, the cost price of goods refers to the production or procurement cost of goods, including raw materials, processing fees, packaging fees, profits, and other costs. Freight to loading port refers to the cost of transporting goods from the place of production or procurement to the loading port, including transportation fees, loading and unloading fees, insurance fees, and other expenses.

It should be noted that the FOB price only includes the price of the goods when they leave the loading port, and does not include costs such as sea freight, insurance, import tariffs, value-added tax, etc. These costs will be borne by the importer upon arrival at the destination port.
FOB Precautions
1. In many cases, due to the good profit of the product and the benefits of tax refunds, for example, the profit of a small cabinet is over 10000 yuan without tax refunds, while the FOB cost is only 4000 to 5000 yuan. Therefore, we often bear this part of the cost on behalf of the customer. In other words, our quotation will directly report the sales price of the product, including the FOB cost.
2. Customers from some countries may have special requirements, such as Egypt, Iraq, Kuwait, etc. They will need commercial invoices and certificates of origin issued by embassies as customs clearance documents.
The fees for the embassy issued documents are not cheap, usually over 1000 yuan, and some even cost 4000 or 5000 yuan. For example, when exporting products to Saudi Arabia, according to the import customs clearance requirements of the Saudi government, many products need to undergo their SABER or SASO certification, and the cost of this certification is also very high, several thousand. Therefore, when negotiating and confirming orders with customers, it is necessary to ask them clearly what customs clearance documents and requirements they need.
Some customers may not have made these requirements during the negotiation of the order, but when we ship the goods and inform us that they need these customs clearance documents, they will need to pay extra for this additional cost.
3. Under FOB terms, the freight forwarder for shipment is the customer's designated freight forwarder, and the customer's designated freight forwarder often charges additional fees. When our goods are ready for shipment, the customer will provide us with the contact information of their freight forwarder. Before contacting the freight forwarder to send them the booking documents, we need to ask them to report the local port charges and other fees to you by email, so that you can know how much they charge.
In general, the fee is two to three hundred yuan more than the normal fee, but if there is excessive overcharging, we need to negotiate with the freight forwarder or customer, and even request the customer to change the freight forwarder. If you do not ask the freight forwarder to quote you this price before shipment, and the goods have already departed from the ship, if there is any overcharging on the bill of lading given to you by the freight forwarder before receiving the bill of lading, you will only be at a loss. Even if you protest with the customer, it is difficult to explain, and the customer will think that this is the cost you should bear, So be sure to have the customer's designated freight forwarder report port miscellaneous fees to you before you book the warehouse for shipment.

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