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Term entry
FOB Pricing (Full Package / Free on Board)
The dominant trade term in apparel manufacturing (80%+ of international orders), where the factory price includes materials through port loading,fabric represents 60-70% of FOB cost, with global benchmarks ranging from $3-10 FOB Bangladesh to $15-50+ nearshoring (USA/EU), governed by Incoterms 2020.
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What is FOB Pricing (Full Package / Free on Board)?
FOB (Free on Board) is the most common Incoterm in apparel manufacturing, used in 80%+ of international orders. The factory price includes all costs from materials sourcing through loading goods onto the shipping vessel,fabric (60-70% of cost), trims (5-10%), labor/CMT (15-25%), packaging (2-5%), and factory profit (5-10%),but excludes international shipping, insurance, duties, and customs clearance.
2026 FOB pricing benchmarks by country (USD + ₹):
- Bangladesh: $3-10 FOB / ₹273-910,using $0.60-1.30/hour labor (lowest globally)
- India: $4-12 FOB / ₹364-1,092,~$2.10/hour labor (INR 178 daily minimum), strong textile integration
- Vietnam: $5-15 FOB / ₹455-1,365,$2-3/hour wages (2026), 85-95% industrial zone occupancy
- China: $8-20 FOB / ₹728-1,820,$6.50/hour wages offset by 3x productivity vs. Bangladesh
- Nearshoring (Mexico/Turkey): $15-50 FOB / ₹1,365-4,550,2-3x premium but 50-70% faster delivery
- Domestic US/EU: $30-100+ FOB-equivalent / ₹2,730-9,100+,premium quality, 2-4 week lead times
FOB cost breakdown (typical garment):
| Component | % of FOB | Example ($12.50 hoodie) |
|---|---|---|
| Fabric | 60-70% | $7.50-8.75 / ₹683-796 |
| Trims | 5-10% | $0.60-1.25 / ₹55-114 |
| Labor/CMT | 15-25% | $2.00-3.00 / ₹182-273 |
| Packaging | 2-5% | $0.30-0.60 / ₹27-55 |
| Factory profit | 5-10% | $0.60-1.25 / ₹55-114 |
FOB vs other Incoterms:
- EXW (Ex-Works): Buyer responsible from factory gate,lowest factory price, highest buyer logistics
- FOB: Seller responsible through port loading,industry standard for apparel
- CIF (Cost, Insurance, Freight): Seller covers ocean freight + insurance,simplifies buyer logistics
- DDP (Delivered Duty Paid): Seller handles everything including customs,turnkey for buyer
FOB vs CMT pricing:
- FOB: Factory handles everything ($3-20 complete),simpler for buyer, factory manages procurement risk
- CMT: Brand provides materials, factory only cuts/makes/trims ($2-8/garment, ₹182-728),more control but buyer bears sourcing logistics
Why this matters for fashion entrepreneurs.
FOB pricing dominates 80%+ of international apparel trade,understanding it is essential for any brand sourcing globally. The key insight: fabric represents 60-70% of FOB cost, making material selection the most impactful pricing decision.
Global sourcing strategy by brand stage (USD + ₹):
- Startup (100-500 units): Bangladesh/India FOB $3-12 (₹273-1,092),lowest entry, 8-14 week lead times
- Growing brand (500-5,000 units): Vietnam/China FOB $5-20 (₹455-1,820),better quality consistency
- Established brand (5,000+ units): Multi-country strategy,China for quality, Bangladesh for basics, nearshoring for speed
- Premium/DTC: Nearshoring FOB $15-50 (₹1,365-4,550),4-6 week lead times justify 2-3x premium
Landed cost calculation (beyond FOB):
A $12.50 FOB hoodie (₹1,138) actually costs $14.06-16.93 landed (₹1,279-1,541):
- Ocean freight: $0.75-1.50 (₹68-137) per unit
- Insurance: $0.06-0.13 (₹5-12)
- Import duties: $0.60-2.50 at 5-20% (₹55-228)
- Customs/handling: $0.15-0.30 (₹14-27)
- Total landed: 20-35% above FOB
Negotiating FOB effectively:
- Request itemized costing (fabric, CMT, overhead, profit margin)
- Compare FOB across 3-5 factories on identical specifications
- Negotiate 5-15% reduction for repeat orders and volume commitments
- 85% of fashion executives plan regional production by 2026 (up from 43% in 2023),use nearshoring competition
Where to source.
Global FOB sourcing by manufacturing region:
Top manufacturing countries (2026 benchmarks):
- Bangladesh: FOB $3-10 (₹273-910),$0.60-1.30/hour labor, best for basics and large standardized orders
- India: FOB $4-12 (₹364-1,092),~$2.10/hour, strong vertical integration, excellent for embellished/craft garments
- Vietnam: FOB $5-15 (₹455-1,365),$2-3/hour (2026), good infrastructure but 85-95% industrial zone occupancy
- China: FOB $8-20 (₹728-1,820),$6.50/hour but 3x productivity, superior quality control and infrastructure
- Mexico: FOB $15-30 (₹1,365-2,730),nearshoring for US brands, USMCA duty-free access
- Turkey: FOB $12-25 (₹1,092-2,275),nearshoring for EU brands, good quality/speed balance
How to evaluate an FOB quote:
- Request itemized cost breakdown (fabric 60-70% + CMT 15-25% + trims 5-10% + overhead + margin)
- Verify fabric specification matches your requirements (factories may downgrade)
- Request counter-samples before approving bulk production
- Confirm all trim, label, and packaging specifications in writing
- Compare landed cost (FOB + freight + duties + customs) not just FOB alone
Red flags in FOB quotes:
- FOB below country minimum (e.g., <$3 from Bangladesh for basic t-shirt likely means material substitution)
- Vague material descriptions without GSM, composition, or supplier details
- No sample offered before bulk production
- Payment terms 100% upfront (standard: 30% advance, 70% before/at shipment)
Standard payment terms:
- 30% advance, 70% before shipment (small/new brands)
- 30% advance, 70% against bill of lading (established relationships)
- Letter of Credit for orders >$50,000 (₹4,550,000)
What it costs.
Global FOB pricing benchmarks by garment type (USD + ₹):
Basic garments:
| Garment | Bangladesh | India | Vietnam | China | Nearshoring |
|---|---|---|---|---|---|
| T-shirt | $3-5 / ₹273-455 | $3-6 / ₹273-546 | $4-7 / ₹364-637 | $5-8 / ₹455-728 | $12-20 / ₹1,092-1,820 |
| Casual shirt | $5-8 / ₹455-728 | $5-10 / ₹455-910 | $6-12 / ₹546-1,092 | $8-15 / ₹728-1,365 | $15-30 / ₹1,365-2,730 |
| Basic dress | $6-10 / ₹546-910 | $8-15 / ₹728-1,365 | $8-15 / ₹728-1,365 | $10-18 / ₹910-1,638 | $20-40 / ₹1,820-3,640 |
| Denim jeans | $8-12 / ₹728-1,092 | $8-15 / ₹728-1,365 | $10-18 / ₹910-1,638 | $12-22 / ₹1,092-2,002 | $20-40 / ₹1,820-3,640 |
Premium garments:
- Heavyweight hoodie (500 GSM): $12.50 FOB benchmark (₹1,138),2026 standard
- Blazer: $25-60 / ₹2,275-5,460 (varies by construction complexity)
- Formal shirt: $10-20 / ₹910-1,820
FOB to retail markup (global):
- Wholesale: 2-2.5x FOB (B2B pricing)
- Domestic retail: 3-5x FOB
- International DTC: 4-8x FOB
- Luxury: 8-12x FOB
Hidden costs beyond FOB:
- Ocean freight: $0.50-2.00/unit (₹45-182)
- Air freight (rush): $4-8/unit (₹364-728),8-16x ocean cost
- Import duties: 5-20% of FOB value
- Quality inspection: $309-409/man-day QIMA/SGS (₹28,119-37,219)
- Total landed: 20-35% above FOB price
Frequently asked.
FOB (Free on Board) means the factory price includes all costs from materials through port loading,fabric (60-70% of cost), trims, labor, packaging, and factory profit,but excludes international shipping, insurance, duties, and customs clearance. It's the most common Incoterm in apparel with 80%+ of international orders using FOB terms. A 2026 benchmark: heavyweight hoodie (500 GSM) costs $12.50 FOB (₹1,138). FOB enables transparent comparison across countries: Bangladesh $3-10 (₹273-910), Vietnam $5-15 (₹455-1,365), China $8-20 (₹728-1,820), nearshoring $15-50+ (₹1,365-4,550+).
FOB includes everything from materials to port delivery,fabric (60-70%), trims, accessories, packaging, labor, and factory profit,with garments costing $3-20 FOB (₹273-1,820) depending on complexity and country. CMT covers only manufacturing labor ($2-8/garment, ₹182-728) with the buyer sourcing and shipping all materials. FOB suits brands wanting turnkey solutions using factory buying power (especially fabric at 60-70% of costs), while CMT benefits brands with existing material suppliers or specific fabric sources. Example: basic t-shirt FOB $3-6 complete vs. CMT $2-3 with buyer providing $1-3 fabric.
FOB pricing sums: fabric costs (60-70% of total), trims and accessories (5-10%), labor/CMT (15-25%), packaging (2-5%), domestic transport to port (1-2%), and factory profit (5-10%). A 500 GSM heavyweight hoodie benchmarks at $12.50 FOB (₹1,138): approximately $7.50-8.75 fabric (₹683-796), $0.60-1.25 trims (₹55-114), $2.00-3.00 labor (₹182-273), $0.30-0.60 packaging (₹27-55), and $0.60-1.25 factory profit (₹55-114). Regional variations: Bangladesh $3-10 (₹273-910) using $0.60-1.30/hour labor, China $8-20 (₹728-1,820) offset by 3x productivity.
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