Prepare of price quotation is the most important part in apparel industry. It’s very important for both buyer and seller. Manufacturer or exporter should be more careful, when they are going to apply the price quotation of the product. Here manufacturers of products are the seller of the products. Price quotation is the business proposal which is made by seller for the interested buyer who wants to buy fashionable goods as specific prices for certain terms and conditions. Manufacturer of the products or sellers always likes to offer better opportunity for his buyer. Most important, the quotation letter should contain all the information which is required for understanding all the points of dealing.
For price quotation letter, few important point should be follow before apply the letter of price quotation for garments products. They are-
- Should concern type of quotation.
- The quality of product offered for sale
- Per unit selling price of the garments products.
- Total value of the products
- Payment mode like cash or credit, cash discount (penalty) or any other allowances
- Shipment mode like Sea, Air or Sea-air & TOD (Time of delivery), Place
- Labeling & packing details
- Full instruction of insurance
- List of country destination and documentation details
In additional, there may be lots of points should be maintained in the price quotation of garments products. Actually, additional requirement depends on buyer requirement. At last, we will see a simple sample format of price quotation letter.
An introductory sample letter to a prospective buyer:
"Dear Jon,
XYZ Apparels Ltd. Manufactures a wide variety of ready-made garments and is already exporting to major buyers of the USA, Canada, UK, France and Germany.
We are interested in expanding our trade in Japan and believe that your company already imports the line of products that we produce.
We are enclosing a copy of our brochure and price list for examination at your convenience and we would be pleased to forward samples of any item of garment that may be interest to you.
Thanking you and looking forward to your positive response.
Best regards
Name
Marketing Manager / Merchandiser "
As we know, price quotation is the most important factor in apparel industry for merchandiser. Price quotation is the mutual agreement between buyer and manufacture or seller. There are many types of quotation considered for exporting products during price quotation. Those are in the following:
- LOCO: The lowest quotation of price is called LOCO. It means on the spot. When buyer will carry his product or goods from seller or manufacture factory to own factory or warehouse. In this case, all carrying cost will be bearded by the buyer.
- FAS: Means Free Along Side Ship. It determines that seller or manufacture will bear the carrying cost from his warehouse to the ship and rest of the destination cost will bear buyer. That means buyer will provide the expenses from ship loading to the buyer warehouse.
- FOW: FOW means Free On Wagon. It determines that manufacture or seller will bear carrying cost from his warehouse to the nearest railway station and rest of the carrying cost will bear by the buyer.
- CIFE: Full meaning of CIFF is Cost, Insurance, Freight and Exchange. Manufacturing cost, insurance charge, carrying cost and exchange cost will be included in price quotation of the product.
- CWO: It means Cash with Order. It determines that buyer will send money along with the order. In this case, order will not be executed without receiving the order.
- COD: Means Cash On delivery which is determine that buyer will pay cash after receiving the desired order goods to the desired destination.
- FOR: It means Free On Rail. It determines that the seller or manufacture will bear all expenses from his own warehouse to the railway station. Also seller or manufacture will bear the loading cost and rest of the cost will bear by the buyer.
In apparel industry, there are mainly four systems of calculation for price quotation which are as under:
- FOB (Free on Board)
- CFR / C & F (Cost of Freight)
- CIF (Cost, Insurance & Freight)
- CMT (Cut make and trims)
- FOB (Free On Board):
FOB means ‘free on board’. Now most of the garments industry price quoted on FOB. It determines that seller or manufacture will bear all costs which required reaching the goods from his own warehouse to the board of ship at the port of shipment. That means manufacture or seller will include the cost
of fabric, accessories, cost of making, overhead, C&F and transportation
cost (from factory warehouse to shipment port) for making the price of product
quotation. Here also seller will be bearded product loading expenses. Exporter does not bear the cost of freight of ship or air. It is buyer (importer) who himself bears the freight of ship or air.
- C&F (Cost of Freight):
CFR / C & F means ‘Cost of Freight’. That means
FOB (Cost) + Freight = C & F
In the case ship or air freight is carried by the exporter while quoting price, the exporter quotes price a bit higher than FOB. The whole responsibility including the sending of goods to the selected port of the importer is shouldered by the exporter ship or air. Freight may vary from place to place and shippers to shippers. Also note that, seller will not bear the insurance cost in this quotation.
- CIF (Cost Insurance & Freight):
CIF means cost insurance & freight. In this case in additional to the bearing of freight the cost of insurance is also born by the exporter or manufacture. The exporter, while quoting CIF price, quotes much higher than C&F value. That means
C&F + insurance = CIF
Normally we can add 1-2% insurance charge with CIF price.
- CMT (Cut Make and Trims)
CMT means ‘Cut make and trims’. Making cost, accessories and trimmings cost of garments has included in the quotes of garments which is provided by seller or manufacturer. In this case, buyer provides all the required raw materials to the manufacturer and exporter gets only the making cost, accessories and trimming cost of the product.
During the fixation of FOB price following notes are to be followed carefully:
- Cost of fabric/Doz. Garments (Woven/Knit) or cost of yarn /Doz. Garments (in case of sweater)
- Cost of accessories / Doz. Garments
- Cost of transportation from factory to sea port or airport
- Clearing and forwarding cost
- Overhead cost
- Commission/Profit