In garment exporting, pricing of garments are mostly quoted on FOB (Free On Board). Free on board(freight on board) price means a price which includes goods plus the services of loading those goods onto some vehicle or vessel at a named location which i put in parenthesis. FOB (Source port) does not includes the shipping charge and Insurance. Where as FOB(destination) includes shipping charges and insurance cost.

Landed Cost is the total cost of a product once it has arrived at the buyer’s door. This list of components that are needed to determine landed costs include the original cost of the item, all brokerage and logistics fees, complete shipping costs, customs duties, tariffs, taxes, insurance, currency conversion, crating costs, and handling fees. Not all of these components are present in every shipment, but all that are must be considered part of the landed cost.

Clearly it is advantageous to reduce the cost of each or any component of landed cost. Each one will allow the seller to lower the final selling price or increase the margin associated with that sale.

Last Cost = FOB + Costs levied on landing.

Margin taken = Sales Cost - Last Cost.