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What is the difference between FOB price and ex-factory price?
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TRACKING NO. 20260129 / GLOBAL Zhongshen Trade · 23+ Years of Expert Trade Agency
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Our factory has always done domestic sales and is used to quoting ex-factory prices. Now aforeign trade customer is asking for an FOB price. What is the difference between the two? If the conversion is wrong, will it lead to a loss?
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
The core difference between FOB price and ex-factory price (EXW) lies in the responsibility，risk transfer nodes，and customs compliance requirements. Under ex-factory price (EXW)，once the goods leave your factory gate，all risks，costs，and compliance responsibilities transfer immediately to the buyer，you only ensure the product meets factory standards. Under FOB price，you must bear all costs and risks until the goods are delivered to the designated port and loaded onto the vessel，including inland transport，port operations，export declaration，and commodity inspection. From a compliance perspective，F(xiàn)OB quotes must accurately account for these costs and truthfully declare the transaction method as "FOB" on the declaration form，otherwise，you may face customs price queries，audits，or risks of being classified as under-reporting. Special reminder: under FOB，you are responsible for export clearance，ensure the product doesn't involve license management or IP filing，otherwise goods cannot be loaded at port，and all losses fall on you. Suggest asking the forwarder for a detailed FOB fee list to avoid profit erosion from omissions.
Andy GuoYears of service：3Customer Rating：5.0
Supply Chain Management ExpertStart a Chat
At the logistics operation level, converting ex-factory price to FOB price means adding all hard costs from "factory to ship's rail". Specifically: 1) inland freight from factory to port (by volume/weight); 2) Port THC (terminal handling charge); 3) export declaration fee; 4) documentation fee; 5) potential storage or demurrage fees. Practical suggestion: get lump-sum FOB quotes from 2-3 forwarders and use the median as your accounting benchmark. A small tip: if volume is large, sign an annual agreement with a forwarder to lock in rates and avoid forex or fuel price volatility. Additionally, under FOB you handle booking; clarify shipment periods and cut-off times in the contract, leaving a 2-3 day buffer. Many factories suffer when goods are ready but shipping delays or rollovers cause missed deadlines and customer claims. Remember, FOB quotes must specify "FOB Shanghai/Shenzhen", as costs differ 10-15% between ports.
Victor SunYears of service：5Customer Rating：5.0
Trade Risk Control ManagerStart a Chat
From a business negotiation perspective, quoting FOB price directly is a key step in demonstrating your international trade professionalism. When a customer asks for FOB, they are likely comparing suppliers globally; FOB allows them to see the landed cost intuitively. Suggestion script: "We usually quote FOB Shanghai so you can clearly calculate the total cost and it facilitates your import license application." If they insist on ex-factory, respond strategically: "Certainly, but you will need to arrange logistics and clearance within China yourself, which might be costlier and carries uncontrollable risks." The key is to break down the FOB price: ex-factory price + transparent logistics fees. This looks professional and avoids the perception of excessive profit. Remember, FOB quotes help lock in customers because you control the initial logistics, making it harder for them to switch suppliers. Finally, specify shipment notification obligations under FOB: you must send a shipping advice within 24 hours of sailing, or it may affect the customer's insurance and lead to disputes.