Target FOB Price Calculator

How back-costing works

Most pricing starts with the factory quote and builds upward. Back-costing starts with the retail price and works down, so you know your cost ceiling before you ask for quotes. Every margin here is calculated as (price − cost) ÷ price.

Because the duty, insurance and agent fee depend on the FOB price itself, the tool solves for FOB algebraically rather than by trial and error:

The tool checks its own answer by adding all the costs back up from the FOB price, which should equal your maximum landed cost.

Worked example

You want to sell a jacket at a retail price of 100, with no tax in the price. The retailer needs a 50% margin, you want a 50% margin on your wholesale price, and you expect no discounts. Duty is 15% on FOB, freight is 1.00 per garment, insurance is 0.5% of FOB, and other costs are 0.50.

• Wholesale price = 100 × (1 − 0.50) = 50.00
• Maximum landed cost = 50 × (1 − 0.50) = 25.00
• Maximum FOB = (25.00 − 1.00 − 0.50) ÷ (1 + 0.005 + 0.15) = 23.50 ÷ 1.155 = 20.346
• Check: 20.346 + 0.102 insurance + 3.052 duty + 1.00 freight + 0.50 other = 25.00

These are the calculator's starting values, so you can see the result above and then replace them with your own.

Things to confirm before you rely on the result

• Duty rate and basis. Rates depend on the product classification, the country of origin and current trade rules, and they change. Some countries, such as the United States, charge duty on the FOB value, while many others, such as those in the EU, use the CIF value. Ask a customs broker for the right figure and basis.
• Agent fees. Whether a buying agent's commission is part of the dutiable value depends on the rules of the importing country. Confirm this with your broker. The tool treats it as outside the duty base.
• Margin definitions. Margin is a percentage of the selling price, and markup is a percentage of cost, so a 50% margin is a 100% markup. Make sure your retailer and your suppliers mean the same thing.
• What FOB includes. FOB (free on board) normally means the price to the port of shipment. Confirm with your factory what is and is not included before comparing quotes.

Frequently asked questions

What does the retail multiple tell me?

It is the retail price divided by the maximum FOB price. It shows how much room your margins, duty and freight leave for the factory. A lower multiple means a tighter budget for the product.

What if the maximum FOB comes out lower than any factory will accept?

You have four levers: raise the retail price, accept a lower margin, reduce the cost of materials and construction, or reduce freight, duty and other costs. Change one input at a time to see which one matters most.

Why does the tool let me enter tax or VAT?

In many countries, the ticket price includes tax, which neither you nor the retailer keeps. Entering the tax rate removes it before the margins are applied.

Can I use it for accessories and footwear?

Yes. The arithmetic is the same for any product that is bought FOB, sold to a retailer and then sold to a customer.

Related tools and resources

• Landed Cost Calculator
• Garment Cost Sheet
• Merchandising Metrics Calculator
• Fabric Consumption Calculator
• Production Capacity Calculator
• CMT clothing factory directory
• Countries directory
• All tools for the apparel industry

This tool is for planning and general guidance. Results are estimates based on the figures you enter, and real prices, duties, freight and fees can differ. Confirm important figures with your suppliers, freight forwarders and customs brokers. See our Legal page for terms of use.