Friday, April 14, 2017

Price Quotation for Garments (Long sleeve shirt)

In the apparel manufacturing industry, merchandiser prepares a price quotation for garments export buyer. Different price fixation processes are used to make this price quotation.

There are three processes for fixation of export prices which are as below:

  1. FOB (Free on board)
  2. C & F (Cost & freight)
  3. C I F (Cost, insurance & freight) 
FOB means “free on board” i.e exporter does not bear the cost of freight of ship or air. It is buyer (importer) who himself bears the freight of ship or air

C & F means Cost of freight i.e.

FOB (cost) + Freight = C & F

In the case ship or air freight is carried by the exporter while quoting price, the exporter quotes price a bit higher than FOB. The whole responsibility including the sending of goods to the selected port of the importer is shouldered by the exporter ship or air. Freight may vary from place to place and shippers to shippers.

C I F means Cost insurance &freight. In this case in addition to the bearing of freight the cost of insurance is also borne by the exporter. The exporter, while quoting CIF price, quotes much higher than C & F value i.e.

C & F + Insurance = CIF

Normally we can add 1% to 1-1/2% insurance charge with CIF price. During the fixation of FOB price following notes are to be followed carefully:

  1. Cost of fabric/Doz. Garments (woven/knit) or cost of yarn/doz. Garments (in case of sweater)
  2. Cost of accessories/doz. Garments.
  3. C.M (cost of manufacturing)/doz. Garments.
  4. Cost of transportation from factory to sea port or airport.
  5. Clearing and forwarding cost.
  6. Overhead cost.
  7. Commission/profit
The notes above are application in case of sending goods aboard on FOB basis. The following example will clarify how to fix price of a particular commodity:

Price quotation for
long sleeve shirts:
Let see the quote a price of one dozen long sleeve shirts:

Price quotation for long sleeve shirts
Fig: Price quotation for long sleeve shirts for example
Fabric (30Yds x $0.95) cost/doz …………………………..……......................… = US $ 28.50
Accessories cost/doz ………………………….....……………….....................… = US $ 06.00
CM (Cost of manufacturing)/doz ………………………………………….....…... = US $ 10.00
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Sub total ……………………………………………………...…….……….....…….. = US $ 44.50

Transport cost from factory to sea port or airport ½% of the above .....................= US $ 0.23

Clearing and forwarding cost 2% ………………………………………...……… = US $ 0.29
Overhead cost ½% ………………………………………………..……………… = US $ 0.23
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Total real net cost price ………………………………………….……………….. = US $ 45.86/doz
Commission 10% …………………………………………..…………………….. = US $ 4.60/doz
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Net FOB price …………………………………………………...……………….. = US $ 50.46/doz
Freight (about 4%) is ……………………………………………….…………….. = US $ 2.00
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Net C & F price is ………………………………………………..……………….. = US $ 52.46/doz
Insurance cost (1-1/2%) is ………………………………………………..……….. = US $ 0.79
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Net C I F price is …………………………………………………..………………. = US $ 53.25/doz


You can also like:
  1. Garment Export Procedure and Documentation
  2. How to Prepare Price Quote for Garment Export Orders
  3. How to Become a Successful Apparel Merchandiser
  4. Working Procedure of a Garment Merchandiser from Order Receive to Shipment
  5. 50 Most Useful Terms Used in Apparel Merchandising