FOB Price From EXW
Your supplier quotes ex-works. Your buyer wants FOB. The difference is four blocks of origin cost — and they do not scale the way you might expect.
What Sits Between EXW and FOB
Under EXW the seller's only obligation is to make the goods available at their own premises. The buyer is responsible for loading, moving, and clearing the goods for export. Under FOB the seller has taken on all of that up to the moment the goods are on board the vessel. Converting one to the other means adding back exactly those obligations.
| Block to add | Charged how | Scales with quantity? |
|---|---|---|
| 1. Loading at the factory | Per shipment or per hour | No |
| 2. Inland haulage to the port | Per truck or per container | No — and steps up in whole vehicle loads |
| 3. Export clearance, licensing, inspection | Per declaration | No |
| 4. Origin terminal handling and loading on board | Per container, or per CBM/tonne for LCL | Only under LCL |
The first block surprises people. EXW does not include loading the goods onto the collecting vehicle — Incoterms 2020 puts that on the buyer. If a supplier says "EXW, and we'll load it for you," that loading is a separate service to agree and price, not something the term already covers. When you convert to FOB, it becomes part of your cost.
How Big Is the Uplift? It Depends Almost Entirely on Order Size
Because three of the four blocks are fixed per shipment, their effect on the unit price is set by how many units you spread them across. The tables below use a $4.20 EXW unit cost and three levels of total origin charges.
Origin cost added to each unit ($)
| Origin charges (total) | 500 units | 1,000 units | 2,000 units | 5,000 units |
|---|---|---|---|---|
| $600 | $1.200 | $0.600 | $0.300 | $0.120 |
| $1,200 | $2.400 | $1.200 | $0.600 | $0.240 |
| $2,400 | $4.800 | $2.400 | $1.200 | $0.480 |
That uplift as a share of the $4.20 EXW cost
| Origin charges (total) | 500 units | 1,000 units | 2,000 units | 5,000 units |
|---|---|---|---|---|
| $600 | +28.6% | +14.3% | +7.1% | +2.9% |
| $1,200 | +57.1% | +28.6% | +14.3% | +5.7% |
| $2,400 | +114.3% | +57.1% | +28.6% | +11.4% |
The same origin charges can add under 3% or over 100% to the unit price. That is the whole argument against converting EXW to FOB with a rule of thumb — "add about 10% for FOB" is roughly right in one corner of that table and badly wrong in the others. Two further points the table makes visible:
- A cheap product carries a bigger percentage uplift. The absolute uplift is set by the freight, not the goods. A $0.80 EXW part shipped in the same container as a $4.20 part sees a five-times larger percentage increase. Percentage rules of thumb mislead most on exactly the low-value, bulky goods where origin cost matters most.
- Doubling the quantity halves the uplift, until the shipment outgrows one container. The cost is fixed only while it fits. Add a second container or a second truck and the origin charges step up rather than scale smoothly — which is why the table is a planning aid, not a quotation.
LCL or FCL Changes the Shape of the Cost
Under LCL (less than container load) the shipment shares a container, and origin charges are routinely quoted per cubic metre or per tonne with a minimum. Part of the origin cost therefore moves with volume rather than being fixed, so the per-unit uplift falls more gently as quantity rises. Under FCL (full container load) the charges are per container: terminal handling, documentation, seal, lift-on. Those do not change whether the box is a quarter full or completely full, so the per-unit uplift falls steeply with quantity and then resets the moment you need another container.
The practical consequence: fill the container. If your order leaves a container half empty under FCL, you are paying the same origin charges across half as many units.
The Trader's Margin Mistake
If you buy on EXW terms and sell on FOB terms, your margin has to be applied to the full FOB cost — the goods and everything you spent getting them to the vessel. Applying it to the goods only is a common and expensive error.
Correct: margin on FOB cost
EXW $4.20 + origin $1.200 = FOB cost $5.400. At a 15% margin the price is $5.400 ÷ 0.85 = $6.353. Profit is $0.953 per unit, which is 15.0% of the price.
Wrong: margin on goods, charges added on top
$4.20 ÷ 0.85 = $4.941, plus $1.200 of charges = $6.141. That is $0.212 per unit below the correct price, and the realised margin is only 12.1% — not the 15% you thought you were quoting.
On 1,000 units the mistake costs $212 of profit, and it is invisible in the quote: the price still looks reasonable, the order still ships, and the shortfall only shows up when you compare the gross margin you planned with the one you got. The gap widens with the size of the origin charges — which, as the tables above show, is exactly the situation where you are least able to absorb it.
Work Through Your Own Numbers
- How to calculate an FOB price — the two-step formula, the cost builder, and what belongs in FOB cost.
- FOB & CIF calculator — enter costs in USD or CNY and see EXW, FOB and CIF together.
- Profit margin calculator — check what margin a given selling price actually delivers.
- EXW vs FCA vs FOB — why FCA is often the better answer for a container that moves by road or rail.
The formulas used across this site are written out on the methodology page. Once you have an FOB figure, the supplier quote comparison turns quotes given on other terms into an equivalent landed cost per unit.
Frequently Asked Questions
How do I convert an EXW price to FOB?
Add the origin costs — loading at the factory, inland haulage to the port, export clearance, and origin terminal handling and loading on board — then divide the total by the quantity and add it to the EXW unit cost. That gives FOB cost; apply your margin to that figure to get the FOB price.
Is FOB always more expensive than EXW?
The FOB price is always higher than the EXW price, because it includes obligations the EXW price leaves with the buyer. Whether FOB costs the buyer more in total depends on whether they could have arranged the same origin services more cheaply themselves.
Does EXW include loading the truck?
No. Under Incoterms 2020 the seller places the goods at the buyer's disposal without loading them onto the collecting vehicle. Loading is the buyer's cost unless you agree otherwise.
Should I quote FOB or FCA instead?
If the goods travel by road, rail or air, FCA is the correct term — FOB is written for sea and inland waterway transport. For a container that reaches the port by truck, FCA is often the more accurate description of where your responsibility ends.
Why does my FOB price change between orders of different sizes?
Because the origin charges are fixed per shipment and are divided across the units. A smaller order spreads the same charges over fewer pieces.