EXW price and FOB price

During quotation, many Chinese makeup brush manufacturers do not exactly know the difference between EXW price and FOB price. Most of them believe the EXW price and FOB price is almost the same since they no need to pay the shipping charge to customers.

 

The truth is there is really big difference between these two terms. EXW means Exwork. If the price we quote is EXW price, that means our responsibility is just till production finished. Customers should be responsible for everything ever since, including finding a forwarder in China to arrange the shipment to the port, paying custom related fees and shipping charge. The makeup brush manufacturers only need to ensure the production to be finished on time.

 

But if we quote FOB price, we should arrange everything till the goods leave the port, so we will have to contact the forwarder for shipment arrangement, ship the goods and pay the related charge to the port, coordinate and pay the charge for Chinese customs declaration. Therefore, comparing to EXW price, we will pay about ￥2000.0 more for FOB price.

 

Therefore, while quotation, it is best for makeup brush manufacturers to quote EXW price, so that we can take less responsibility and risks; if customers require FOB price, we should add at least ￥2000.0. If the shipping charge to the port is higher, the total cost will be higher relatively.

 

Some manufacturers may get great loss as they do not clearly understand the difference between these two terms. For example, they just calculate the production cost to custom makeup brushes, so the price they quote should be EXW price, but they quote the price to customers as FOB price. So they have to afford the extra cost by themselves. Sometimes, the total profit of the shipment may be lower than such cost, so they actually do this business at a loss.

 

During communication with customers, we should clearly understand all related terms and knowledge, most of the time, knowledge is really wealth!