Costing and delivery terms: FOB, DDP and currency
Audio narration · listen first
The price in a supplier quote says nothing on its own; two quotes cannot be compared without knowing the unit, currency and delivery terms. Under FOB, freight and everything after it falls to the buyer; under DDP, the goods arrive at the door with duties paid. A correctly entered unit price determines the product cost, and the cost determines the target margin.
In this part
- You learn how the FOB and DDP delivery terms change cost and responsibility.
- You learn to read the unit, currency, exchange rate, MOQ and delivery date together when comparing quotes.
- You see how the unit price in a quote goes into the raw material cost line.
- You understand how the target cost affects your decision on which supplier gets the order.
Terms in this part
- FOB
- The delivery term under which the seller is responsible until the goods are loaded onto the ship at the port of loading, and the buyer takes over after that.
- DDP
- The delivery term under which the seller delivers the goods to the buyer's address with taxes and customs costs already paid.
- Target cost
- The upper limit a product's cost must not exceed, calculated backward from the target selling price and target margin.
- Target margin
- The target a brand aims for, expressed as the difference between selling price and cost divided by the selling price.
- MOQ (minimum order quantity)
- The lowest order quantity a supplier accepts for an item, often per color.
There are 3 questions at the end of the part; at least 2 correct answers open the next part. The questions open with your Academy account, after your Basic certificate.
Certificate 1 · Pimland