Export price quotations and incoterms play a vital role in marketing. Buyer in trade inquires from the number of foreign companies regarding product or goods. Foreign companies, who are interested in export, provide full details of the desired product along with price quotation.
Purchasing decision of buyer in marketing is significantly affected by the types of price quotation because every price quotation is having its own specific meaning and interpretation.
The role of price quotations is very important in mitigating misunderstanding and disputes between importer and exporter.
Types of Price Quotation
The details of widely used price quotations are as under:
1. Ex Works or Ex Factory (EXF)
This price quotation refers to floor cost of the seller. This creates a minimum obligation to the seller.
The exporter’s responsibility to deliver the goods under this price quotation is over when he places the goods at his own warehouse.
All the remaining expenditures are to be paid by the importer.
Related: 12 Role of Price and Non Price Factors in Marketing.
2. Free carrier (FCA)
Under this price quotations, the exporter’s obligation to deliver the goods is over when he delivers it to the carrier nominated by the importer at the place specified by him.
3. Free Alongside Ship (FAS)
Under this price quotations, the exporter delivers the goods by placing it alongside the ship at the specified port for the purpose of shipment.
Remaining all expenditures are to be paid by the importer.
4. Free on Board (FOB)
If the loading expenditures are added into FAS, the new price quotations will be FOB, Therefore all other expenditures after loading the goods on the ship will be paid by the importer. this is a widely used price quotation in international marketing.
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5. Cost and Freight (C&F)
This price quotation refers that exporter has added the amount of freight from his country’s port to the port of importer.
Therefore, if we add the amount of freight in FOB, the new will be C&F. Process of Price Determination with Examples (Step by Step).
6. Cost, Insurance and Freight (CIF)
If the amount of insurance premium is added in the C&F, the new quotation will be CIF.
The exporters obtain insurance only for minimum cover. If the importer wants full insurance cover, he should either expressly intimate it to the exporter.
The difference in the amount of full insurance cover and minimum insurance cover would be paid by the importer.
All other remaining expenditures, after the arrival of goods at the important port, are to be paid by himself.
Related: 10 Major Factors Affecting Pricing of Product (Explained).
7. Delivered Ex Ship (DES)
This price quotation indicates that the exporter will deliver the goods by placing them at the disposal’s port.
The exporter bears all the risk and costs involved in bringing the goods at the specified port of destination by the importer.
All the expenditures involved in taking delivery of goods and onwards will be paid by the importer.
Related: 3 Main Marketing Strategies Towards Marketing Segmentation.
8. Delivered at Frontier (DAF)
Under this price quotation the exporter delivers the goods by placing it at the disposal of the importer on the arriving means of transport not unloaded, cleared for exports but cleared for import at the specified destination at the frontier, but before the custom post of the adjoining country.
If the importer wants to make exporter responsible for the unloading of goods to bear the risk, requires explicit wording to this effect in the contract, signed by both the parties.
9. Delivered Ex Quay (DEQ)
In this price quotation, the importer clears the goods for import and he has to pay all the taxes, duties and for other formalities, imposed by the government of his country.
This price quotation can be used only when the goods are to be delivered by sea, inland waterway or multimodal transport on discharging from a ship on the quay at the port of destination.
Related: 10 Main Factors Affecting Marketing Environment (Explained).
10. Delivered Duty Unpaid (DDU)
Under this price quotation, the exporter delivers the goods to the importer, which is not cleared for import but not unloaded from any arriving mode of transport at the specified destination.
The exporter bears the risks and costs of transportations of goods, excluding the import duty imposed by the government of importer’s country.
Therefore, in this price quotation, the import duty will be paid by the importer. Top 10 Benefits & Importance of Marketing Research (Update).
11. Delivered Duty Paid (DDP)
In this price quotation, the exporter delivers the goods to the importer cleared for import but is to be loaded from any arriving mode of transport at the specified destination.
Under this price quotation, the obligations of exporters become greater and importer’s obligations become minimum.
Under this price quotation, the exporter has to seak import clearance and is bound to pay import duty.
Good information …for import and export business