Pricing

Export pricing: from ex-works cost to a quotable FOB number

Two mistakes account for most bad export quotes: costing to the wrong Incoterm, and comparing your price against a market number that was never comparable. Both are avoidable.

TradeLala · 25 August 2026 · 6 min read

A calculator and pen resting on printed figures — Cover photo from Unsplash

An export price is not a domestic price plus freight. It is a stack of costs that ends at a precise, contractually defined handover point, and the whole quote means nothing unless both sides agree where that point sits. Get the point right and the arithmetic is straightforward. Get it wrong and you find out at the worst possible moment, once the invoice is already issued.

Incoterms: the eleven handover points

Incoterms 2020, published by the International Chamber of Commerce, define who does what, who pays for what, and, separately and importantly, where risk transfers. Seven apply to any mode of transport. Four are sea and inland waterway only.

Incoterms 2020. "Risk passes" is the moment loss or damage becomes the buyer's problem, which is not always where the cost stops being yours.
Term	Mode	Seller pays to	Risk passes
EXW Ex Works	Any	Nothing, goods available at your gate	At your premises
FCA Free Carrier	Any	Delivery to the named carrier or place	On handover to the carrier
CPT Carriage Paid To	Any	Main carriage to the named place	On handover to first carrier
CIP Carriage & Insurance Paid	Any	Carriage plus insurance (Institute Cargo Clauses A)	On handover to first carrier
DAP Delivered at Place	Any	Arrival at the named place, not unloaded	On arrival
DPU Delivered at Place Unloaded	Any	Arrival and unloading	After unloading
DDP Delivered Duty Paid	Any	Everything, import duty and clearance included	On arrival at destination
FAS Free Alongside Ship	Sea	Alongside the vessel at the port of loading	Alongside the vessel
FOB Free On Board	Sea	Loaded on board at the port of loading	Once on board
CFR Cost and Freight	Sea	Freight to the destination port	Once on board at origin
CIF Cost, Insurance & Freight	Sea	Freight plus insurance (Clauses C minimum)	Once on board at origin

The CIF misunderstanding that causes disputes

Under CFR and CIF you pay the freight to the destination port, but risk passes to the buyer once the goods are on board at your end. If the vessel is lost mid-ocean, that is the buyer's loss, not yours, even though your invoice says "cost, insurance and freight to Rotterdam". Cost and risk are two different lines, and both parties should be clear about which one they are arguing over.

Two more traps worth knowing. CIF's minimum insurance is Institute Cargo Clauses C, which covers limited perils, while CIP requires Clauses A. And EXW puts export clearance on the buyer, which a foreign buyer frequently cannot legally do in India. FCA is usually what both sides actually meant.

Building the price, line by line

Cost upward from the factory and stop where your Incoterm stops. The stack below uses illustrative figures for one 20-foot container so the arithmetic is visible. Substitute your own.

Illustrative only. Note the shape. The ex-works cost dominates, and the gap between an FOB and a CIF quote is around 15%, which is exactly the size of error you make by comparing one against the other.

Lines people forget

Export packing. Sea-worthy packing, palletising, ISPM-15 heat-treated wood. Different from domestic packing and rarely costed on its own.
Bank charges. L/C advising, negotiation, confirmation. A confirmed L/C can cost 1 to 2% of value, and that comes straight out of margin.
Credit insurance. If you are selling on anything other than advance payment, the cover has a price. Put it in the quote rather than in the year-end surprise.
Sample and pre-shipment inspection costs, where the buyer requires SGS, BV or similar.
Currency movement. A quote valid for 30 days on an order shipping in 90 carries three months of exposure. Hedge it or price it.
Incentive receipts, as a credit. RoDTEP and Duty Drawback come back to you, as we cover in the incentives post. Whether you pass them on is a pricing strategy. Forgetting them is not.

Reading the market band from customs data

Now the other half: knowing whether your number is competitive. Customs records carry a declared value and a quantity. Divide one by the other and you have a unit value, which is the closest public proxy for a market price that exists.

It is genuinely useful and genuinely easy to misuse. Four rules:

Normalise the currency before you compare anything
Indian customs values are declared in INR. Your competitor's quote to a German buyer is in EUR or USD. Convert using the exchange rate at the shipment date, not today's. A twelve-month band built at a single rate smears a 6% currency move across the whole analysis and invents a trend that was never there.
Normalise the unit, and drop what will not normalise
The same product line carries quantities in square metres, pieces, kilograms and sets, sometimes within a single month. A unit value averaged across mixed units is not a number, it is a mistake with decimal places. Filter to one unit, convert what converts cleanly, discard the rest.
Use the band, not the average
Take the 25th, 50th and 75th percentiles. The median is your reference point. The spread tells you whether the market is commoditised, meaning a tight band and competition on price alone, or differentiated, meaning a wide band with room for specification and service. A single average hides exactly the thing you need to see.
Compare like for like
Same code, same lane, same Incoterm-implied basis. An Indian export declaration is generally an FOB-basis value. An import declaration in the destination country is usually CIF-basis. Compare them directly and you build the freight into your "price gap", which will convince you that you are cheaper than you are, or dearer.

The useful output is a position rather than a number. "6% above median, inside the band" is a sentence you can defend in a negotiation. "₹412 per square metre" is not.

What being below the median actually means

It does not mean you are competitive. A price under the 25th percentile means one of four things, and only one of them is good news:

Possibility	Test
You genuinely have a cost advantage	Does your gross margin hold at that price? If yes, good.
You are comparing FOB against CIF	Recheck the basis of both numbers before anything else.
You are selling a lower specification than the band represents	Read the goods descriptions on the top-quartile shipments.
You have underpriced and will find out at year end	Rebuild the cost stack including the lines listed above.

Being above the median is not a problem either. It is a brief. It means you need a reason, and the top-quartile shipments will usually tell you which reasons this market pays for: certification, grade, packing, lead time, or simply being reliable.

Quote the term, always

Write "USD 4,850 per 20'FCL, FOB Mundra, Incoterms 2020". Price, unit, named place, rule version. A price without a named place is not a quotation, it is the opening of an argument. Say what it excludes too: duty, destination charges, and demurrage after free time.

With the number built and positioned, the remaining question is who to send it to, which is the buyer-finding method, and whether they will pay, which is due diligence.