Price conversions for major trade terms

Fob price – Free on Board

Fob price is the cost of a product as it is delivered to the customer at the port of origin. This term includes the cost of the product, any taxes, freight charges and insurance charges applicable when the product leaves the port of origin.

CIF price – Cost, Insurance and Freight

CIF price is the cost of a product as it is delivered on board the customers vessel, including insurance, at the port of origin. This price covers the cost of purchasing the product, loading charges and insurance to the port of origin only. This term does not include freight charges for transport from the port of origin to the final port of destination.

C&F price – Cost and Freight

C&F price is the cost of a product as it is delivered to the customers vessel at the port of origin. This price covers the cost of purchasing the product and loading charges to the port of origin only. This term does not include insurance or freight charges from the port of origin to the final port of destination.

EXW price – Ex Works

EXW price is the cost of a product as it is delivered to the customer at the factory or warehouse. This term does not include any taxes, duties or freight charges. The customer must arrange any insurance, freight and transportation to the destination themselves.

FOB price is generally the most expensive of the three prices, because it includes the cost of shipping, insurance and other services. CIF price is usually the second most expensive because it includes the cost of freight, insurance and other services. C&F price is usually the least expensive because it does not include insurance or other services. EXW price is usually the cheapest, because it only includes the cost of purchasing the product.

When purchasing goods it is important to understand the differences between these prices so that you can make an informed decision. The FOB price will always include services such as loading, unloading and insurance. The CIF price includes the cost of the product and freight, but does not include insurance or other services. The C&F price will include the cost of product and freight, but not insurance or other services. And finally, the EXW price will include the cost of product only, without any additional services.

When it comes to pricing for international trade, these terms are used to ensure fair and consistent pricing and to facilitate the smooth flow of goods from one country to another. While these prices can vary depending on certain factors, they should always provide a basis to work from when negotiating a deal. Taking the time to understand each of these terms will help you make sure that you are getting the most competitive and fair prices possible.

International trading terminology is essential for both international buyers and sellers. It can be a complex language to understand and one that requires you to be fully aware of even the minutest nuances or details. Here are some of the main ones associated with pricing:

F.O.B (Free on Board):

This stipulates that the buyer pays the cost of transportation of goods, as well as any duties and fees charged. Basically, the seller is responsible for delivering the goods to a destination point, where the buyer then takes over responsibility. The point of delivery is usually specified and may coincide with the loading port.

C.I.F (Cost Insurance and Freight):

In this case, the seller is required to handle both the cost of transportation as well as insurance, unlike F.O.B, this means that all costs associated with the transportation of the goods in question are borne by the seller until the purchaser receives the goods.

C.O.D (Cash On Delivery):

This is a banking system which requires payment in full before the goods are shipped. All invoices and pricing amounts have to be paid in cash prior to the goods being shipped, though this does depend on the terms of the business in question.

Net Pricing:

This stipulates that no additional discounts are available, and the pricing amount is fixed. This can be applied to either an individual item or to an entire order, and usually require immediate payment upon approval.

Minimum Order Quantities (MOQ):

MOQs can set a precise amount of items or products that are necessary to meet the minimum threshold of an order or transaction. This is usually used to ensure that customers purchase the correct amount before an order is placed.

Discounts:

Discounts are generally given in order to stimulate orders or purchases by reducing either the unit price or the overall amount. These can vary, but usually come in the form of either a fixed-price amount or a percentage discount.

These are just a few of the main terms used in international trading and should give you a good understanding of the pricing process and what’s involved. It’s essential that both the buyer and seller agree and understand all the terms of sale prior to any transaction taking place, so as to avoid any misunderstandings or potential disputes in a later stage.