PRICING TERMS

When a factory advises a price quote for production of your garment or item, the price may or may not include shipping. When an overseas factory provides a price, they will add an abbreviation to the end of the price. These abbreviations include: FAS, FOB, CIF, LDP, and DDP. You must understand the meaning of these, so you can understand what is included in the price and what portions the factory is responsible for.

Pricing terms are defined as follows:

FAS – Free Along Side- The price includes agreed services and production of the finished goods, plus the price includes shipping and delivery of the goods to the seaport, airport, or dock. The price does not include loading onto the ship or plane, the shipping or any other charges incurred from that point onward. The factory’s responsibility ends at the port of export.

FOB – Free on Board- The price includes agreed services and production of the finished goods and includes the delivery of the goods to the seaport or airport as well as the uploading of the finished production onto the ship or plane. The price does not include the shipping, or any other costs incurred from that point on. The factory’s responsibility ends on board the shipping vessel.

CIF – Cost, Insurance, and Freight- The price includes the agreed services and production of the finished goods as well as the delivery of the goods to the sea/airport, uploading onto the ship or plane, as well as the shipping charges, and all applicable insurance fees along the way. The price does not include off-loading from the vessel, going through customs, duties or other costs incurred from that point on. The factory’s responsibility ends when the boat docks or plane lands at the country of import.

LDP – Landed and Duty Paid– The price includes the agreed services and production of the finished goods, plus delivery of production to the sea/airport, the uploading on to the ship/plane, shipping charges, shipping insurance, import licenses, off-loading from the boat or plane, and all import duties, customs border inspection fees, and applicable taxes paid. The factory’s responsibility ends when the finished production lot come through customs.

DDP – Delivered and Duty Paid– The price includes the agreed services and production of the finished goods, plus delivery of the production lot to the sea/airport, uploading on to the ship/plane, shipping charges and insurance, import licenses, off-loading from the boat or plane, import duties, customs inspection fees, applicable taxes paid, and the production lot transported (most often by truck) to the ordering company’s warehouse, distribution center, office, or retail store. The factory’s responsibility ends when the goods are delivered to the brand’s warehouse or specified delivery address.

These are universal business and shipping terms. Most factories will quote garment prices CIF or LDP, often for fabric you will receive FOB prices, however you need to know them all, so then you are clear of the additional transportation and fees in which you will need to source and pay. 

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