Many new exporters take their domestic price, convert it to dollars and hope for the best. That approach either leaves money on the table or loses the order. A clear costing sheet shows you exactly what each Incoterm costs you and how low you can go before you lose money.
Start from your ex-works cost (product plus export packing), then add costs in order. EXW plus inland transport, port and customs broker charges gives the FOB cost. FOB plus ocean freight gives CFR, and CFR plus insurance gives CIF. Add your margin, deduct the export benefits you expect to receive, such as RoDTEP or duty drawback, and convert at a realistic exchange rate.
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Step 1: Your ex-works cost
Begin with the full cost of the product: raw material, labour, overheads and the export packing the buyer expects, such as stronger cartons, pallets or shrink-wrap. Add any testing, inspection or certification the order needs. This is your EXW cost. GST is not part of this figure, because exports are zero-rated.
Step 2: Add costs up to FOB
- Inland transport from your factory to the port, ICD or CFS
- Container stuffing or CFS charges
- Terminal handling charges at the port of loading
- Customs broker fees and documentation charges
- Certificate of origin, phytosanitary or other certificates if needed
Step 3: Add freight and insurance for CFR and CIF
For a CFR price, add the ocean freight quoted by your freight forwarder to the destination port. For CIF, add marine insurance, normally calculated on 110% of the CIF value. Freight rates change often, so put a validity date on any CFR or CIF quotation.
A worked example
| Cost item | Amount (INR) |
|---|---|
| Product cost for 1,000 units | 4,00,000 |
| Export packing | 20,000 |
| EXW cost | 4,20,000 |
| Inland transport, port and broker charges | 30,000 |
| FOB cost | 4,50,000 |
| Ocean freight | 60,000 |
| Insurance | 3,000 |
| CIF cost | 5,13,000 |
These figures are only an illustration. Add your margin to each level to get your selling price, then divide by the quantity for a unit price.
Margin, export benefits and currency
Decide your margin on each level separately. Then factor in what you expect to recover after shipment, such as RoDTEP, duty drawback or a GST refund on inputs, which can let you price more competitively. Finally, convert at a cautious exchange rate rather than today's best rate, because the rupee can move between quotation and payment. If you quote in dollars, the currency risk is yours until payment arrives.
Do the maths in seconds
Our free export price calculator follows exactly this structure. Enter your costs once and it shows your EXW, FOB and CIF prices in rupees and in the buyer's currency. Then send the result as a formal offer using the proforma invoice generator. For the meaning of each term, see Incoterms 2020 explained.
Frequently asked questions
Is GST included in the export price?
No. Exports are zero-rated, so GST is not added to the export price. You either export under LUT without paying IGST, or pay IGST and claim a refund.
Should I quote FOB or CIF?
Quote FOB if the buyer has its own freight agent. Quote CIF or CFR if the buyer wants a landed-port price or you can get better freight rates.
How do I handle currency changes in my price?
Use a cautious exchange rate, keep quotations valid for a short period, and consider forward contracts with your bank for large orders.
Should export benefits be included in the price?
Many exporters factor in the RoDTEP or drawback they expect to receive so they can price more competitively, but only count benefits you are sure to get.
Work out your export price
Enter your costs once and see your EXW, FOB and CIF price in rupees and in the buyer's currency. Free, with no sign-up.
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