Landed Cost Is Not the Factory Quote

A founder wrote to us in August with a spreadsheet attached. Three rows, three factories, one column at the far right showing what each had quoted for a two-piece suit. Ours was the middle number. He wanted to know if we would come down to match the lowest one before he placed an order with whoever won that column.

We looked at the sheet before we answered the question he actually asked. The lowest quote was ex-works from a factory several thousand kilometres further from his warehouse than ours. The middle one, ours, was also ex-works. The highest was landed, duty paid, delivered to his door. He had ranked three different questions as if they were one question, because all three answers happened to be numbers with a currency symbol in front of them, and the smallest one had won by default before he had opened a single conversation about what each number actually included.

That spreadsheet is common enough that it is worth writing down what should sit next to it before any number gets ranked.

The figure at the bottom of a quote is the smallest one in the deal

An ex-works quote prices the goods standing at the factory door, ready for collection, and nothing past that point. No freight, no export handling, no duty, no customs clearance, no delivery to wherever you actually are. That is not a trick and it is not a discount. It is a narrower question, answered honestly. We cover the full mechanics of what ex-works does and does not cover, alongside FOB and delivered terms, on our ex-works versus FOB guide, and it is worth reading in full before your next quote arrives, not after.

What matters for comparing quotes is simpler than the full glossary of Incoterms. The number a factory gives you is one line in a much longer sum, and it is the line least connected to where you actually are in the world. Two factories can quote the identical ex-works figure for an identical garment and still land at very different total costs on your shelf, because the rest of the sum depends on where each factory sits relative to you, not on what either one charges for the garment itself.

Three quotes on the same line are not the same comparison

This is where the founder's spreadsheet went wrong, and it is the mistake we see most often from buyers comparing factories for the first time. Ranking three ex-works numbers side by side treats them as the same unit of measurement. They are not, unless every other variable behind them is also identical: same Incoterm, same currency, same freight lane, same country of import, same duty treatment at your border.

Line up the actual questions being answered instead of the numbers answering them. Is this figure ex-works or landed. Is it quoted in your currency or one you will need to convert, at whatever rate applies the day you pay. Does it already include the freight to your country, or does that get added afterward by you and your own forwarder. A factory two time zones closer to your market can lose on the ex-works line and still win once freight is added back in, and a factory further away can look cheaper on paper for the same reason in reverse. None of that shows up in a single column of numbers copied out of three separate emails.

The comparison worth having is not which factory quoted lowest. It is which factory, once every line below is filled in with your own numbers, actually costs the least to have a finished garment on your shelf. We built a sheet for comparing four factory quotes properly for exactly this reason, because the comparison only means something once it is done on the same terms for every quote in it.

What actually sits between the factory door and your shelf

Once an ex-works figure is on the table, six lines separate it from a real landed cost. None of them is optional, and none of them is visible from the factory's side of the transaction.

• The ex-works or FOB figure itself. The cost of the goods, at the factory door or loaded at the origin port, depending on which term you agreed to.
• Freight. Air or sea, priced by lane and by volume, not by the garment. This is the line that moves the most and the one buyers underestimate most consistently.
• Insurance. Usually a small percentage of the goods' value, but a real line, and one that is easy to skip on a first shipment and expensive to have skipped if something goes wrong in transit.
• Import duty. Set by your own country's customs authority against the correct HS heading for the garment, and sometimes reduced under a trade agreement between your country and the country of manufacture. Nobody on the factory side can tell you this number with any authority.
• Customs clearance and brokerage. The fee your broker or forwarder charges to get the shipment through your own border, which exists whether the shipment is one suit or fifty.
• Inland delivery. The last leg, from the port or airport in your own country to wherever the garment actually needs to end up.

Add those six lines to the ex-works figure and you have a landed cost. Skip any of them and you have a number that will surprise you once, usually the week you are trying to reconcile an invoice against a retail price you already advertised.

Freight moves by lane, not by factory

The line buyers most often forget to price separately is freight, and it is worth being specific about why it does not behave the way people expect. Freight is priced by the route and the week, not by which factory is shipping. Drewry's World Container Index for the week of 10 September 2026 put a 40-foot container from Shanghai to Rotterdam at $3,997 and from Shanghai to Los Angeles at $7,352, a difference of nearly double for the same origin port in the same week, driven entirely by the lane and current carrier capacity rather than by anything either factory did differently. A full report on that week's rates is worth a glance before you assume a freight quote from six months ago still holds.

That is the part of a landed cost that has nothing to do with which factory you choose and everything to do with your own destination, your own volume, and the week you happen to be shipping in. Ask your own forwarder for a current quote on your specific lane before you finalise any comparison between suppliers, because a freight figure copied from a previous order can be wrong in either direction by the time you actually book the container.

What we can tell you, and what only your broker can

We can quote you a piece of cloth, a construction, and a garment. What we cannot do, and what nobody sitting on a factory floor in Shanghai can do honestly, is tell you your duty rate. That number depends on the HS heading your garment is classified under in your own country's tariff schedule, on whether a trade arrangement between your country and the country of manufacture reduces it, and on rules your own customs authority sets and updates, not us. A supplier who quotes you a specific duty percentage for your specific country is guessing on your behalf, whether they say so or not.

What we can give you is the structure: the ex-works figure, stated plainly, with nothing folded into it that belongs somewhere else in the sum. From there, your own forwarder prices the freight for your lane, and your own customs broker or tariff schedule gives you the duty line, both of which are numbers specific to where you are standing, not to where we are.

Before you rank a single quote

Build the worksheet before the quotes arrive, not after you have already decided which number you like best. Six lines, in this order: the ex-works or FOB figure, freight for your actual lane and volume, insurance, duty under the correct HS heading for your country, customs clearance and brokerage, and inland delivery to your own door. Fill every line with your own numbers, from your own forwarder and your own tariff, for every factory you are comparing, before any of them gets ranked against the others.

Our own guide to starting a clothing brand has a section built around the same idea, because pricing a retail line against an ex-works figure rather than a landed one is the single most common way a new label's first season underperforms its own spreadsheet. And our made-to-measure suit cost breakdown sets out where the money goes on the production side, before freight and duty ever enter the picture.

If you have quotes from more than one factory sitting in front of you right now, send them to us with the terms each one was quoted on, and we will tell you plainly what is and is not included in ours, so the comparison you make afterward is between landed costs rather than between three different questions dressed up as one.