When you get a price from an overseas clothing manufacturer, the letters after it matter as much as the number. “FOB” and “DDP” describe what’s included in the price and who pays for shipping, duty and tax. Mixing them up is one of the easiest ways for a new brand to blow its budget. Here’s a plain-English guide.
What are FOB and DDP?
Both are Incoterms, internationally recognised trade terms that set out where the seller’s responsibility ends and the buyer’s begins.
FOB (Free On Board)
The price covers making your goods and getting them loaded onto the ship at the port of export (for us, Karachi). From that point, you are responsible for:
- Sea or air freight and insurance
- Customs clearance in your country
- Import duty and import VAT
- Port, handling and courier charges, and delivery to your door
Strictly speaking, FOB applies to sea freight. Air shipments are often quoted on similar terms (such as FCA), but the idea is the same: the price stops at the origin.
DDP (Delivered Duty Paid)
The price covers everything up to your door: production, freight, insurance, customs clearance, import duty and import VAT. Your goods arrive and there are no extra bills to pay.
FOB vs DDP at a glance
| FOB | DDP | |
|---|---|---|
| Production | Included | Included |
| Freight & insurance | You pay | Included |
| Customs clearance | You arrange | Included |
| Import duty & VAT | You pay | Included |
| Delivery to your door | You arrange | Included |
| Price looks | Lower | Higher, but complete |
| Best for | Brands with a freight forwarder | New brands who want one simple price |
Why an FOB price can be misleading
An FOB price always looks cheaper, because it leaves costs out. Once freight, duty, VAT and handling are added, the real cost per piece (your landed cost) can be noticeably higher. When comparing manufacturers, make sure you’re comparing the same terms, or add the missing costs yourself.
Which should you choose?
Choose DDP if this is your first production order, you don’t have a freight forwarder, or you simply want to know your full cost upfront. It’s the simplest option and avoids surprise bills at customs.
Choose FOB if you already work with a freight forwarder, ship regularly and want control over shipping methods and costs. Larger brands often prefer FOB because they can combine shipments from several suppliers.
What about other terms?
- EXW (Ex Works): you collect from the factory and handle everything, including export.
- CIF (Cost, Insurance & Freight): the seller pays sea freight and insurance to your country’s port; you handle import costs and onward delivery.
- DAP (Delivered At Place): the seller delivers to your door, but you pay import duty and VAT when the goods arrive.
A note on import VAT
How import VAT works for your business depends on whether you’re VAT-registered and how the goods are imported. It’s worth a quick conversation with your accountant before your first order.
How we price
We offer DDP UK pricing, so your order arrives at your UK door with duty and delivery included. FOB Karachi pricing is also available if you have your own freight forwarder. For deliveries to Europe or the USA, tell us your destination and we’ll advise on the best option.
Want a delivered price?
List your items with quantities and your order target price, and we’ll send an itemised DDP UK quote.
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