Building Complete Garment FOB Price Quotation Sheets
Lesson Contents Overview
Learning Objectives
Comprehensive Technical GuidanceTextbook & Training SOP
Building Complete Garment FOB Price Quotation Sheets
1. What an FOB Price Really Contains
An FOB price is not a number a merchandiser invents. It is the sum of six cost blocks plus profit, and every block must be priced from its own source document. The six blocks are fabric, trims and accessories, CM (cost of making), value addition such as washing and printing, commercial costs, and profit. When a buyer asks why a shirt costs what it costs, the answer must be this sheet, line by line, not a single rate remembered from a previous order.
The discipline matters because each block moves independently. Fabric prices move with the cotton and yarn market. CM moves with wages and efficiency. Commercial costs move with the buyer test protocol and the inspection level. A quotation built from a single remembered rate carries last season costs into this season order, and the factory discovers the error only when the order closes at a loss.
2. The Six Blocks in Order
Build the sheet in the same order every time, so any merchandiser can audit any style in two minutes. First, fabric: shell, lining, and pocketing, each with consumption multiplied by unit price. Second, trims and accessories: thread, buttons, zippers, labels, and packaging trims, priced per garment. Third, CM: the sewing cost from the SMV and cost-per-minute calculation. Fourth, value addition: washing, printing, embroidery, and any special process, each from its own cost sheet. Fifth, commercial costs: testing, inspection, documentation, forwarding, and bank-related allowances. Sixth, profit, calculated as a percentage of the total cost before profit and shown as its own line.
Keep consumption and price in separate columns for fabric and trims. When the buyer changes a fabric, only the price column changes. When the pattern changes, only the consumption column changes. A sheet that mixes the two into a single lump sum cannot be updated, and an un-updatable sheet is always wrong within one season.
3. Worked Example: Woven Casual Shirt, 10,000 Pieces
Take a woven casual shirt order of 10,000 pieces, with all figures illustrative. Fabric costs BDT 414.00 per garment, trims BDT 86.00, CM BDT 95.00, washing BDT 28.50, printing BDT 12.50, and commercial costs BDT 18.00. Add them step by step: 414.00 plus 86.00 is 500.00; plus 95.00 is 595.00; plus 28.50 is 623.50; plus 12.50 is 636.00; plus 18.00 is 654.00. The cost before profit is BDT 654.00 per garment.
Profit at 10 percent of the cost base is 654.00 multiplied by 0.10, which is BDT 65.40. Add profit to cost: 654.00 plus 65.40 gives an FOB price of BDT 719.40 per garment. Convert to per dozen by multiplying by 12: 719.40 multiplied by 12 is BDT 8,632.80 per dozen. Convert to the order total by multiplying by 10,000: 719.40 multiplied by 10,000 is BDT 7,194,000 for the whole order.
Notice what the conversions do. The buyer compares per-dozen prices across suppliers, so a sheet without a per-dozen line forces the buyer to do the multiplication and invites a comparison error. The factory plans cash flow on the order total, so a sheet without an order-total line hides the size of the commitment. Both lines cost one multiplication each, and both belong on every sheet.
4. The Missing-Line Trap
The most expensive mistake in FOB quotation is not a wrong price. It is a missing line. A factory in Gazipur quoted a casual shirt at BDT 690.00 FOB per garment using a fabric rate copied from a previous season and no separate commercial cost line. The sewing floor hit its efficiency target, yet the order closed at a loss, because the fabric supplier revised the price upward during production and testing and inspection charges arrived as separate bills that had nowhere to sit except profit.
Rebuild that quote with the discipline of this lesson and the error becomes visible before the order is accepted. Fabric at the current quote, trims line by line, CM from the current rate card, washing and printing from their cost sheets, commercial costs at BDT 18.00, profit at 10 percent. The honest price is BDT 719.40, not BDT 690.00, and the BDT 29.40 gap is exactly the missing commercial line plus the stale fabric rate. A buyer who sees the honest sheet may negotiate. A buyer who receives the dishonest sheet signs it, and the factory pays the difference.
5. Profit on the Cost Base, Shown Openly
Profit is always calculated on the cost base in this lesson, never on the selling price, because the factory knows its costs before it knows its price. The formula is simple: FOB price equals cost before profit multiplied by one plus the margin percent. At 10 percent, the shirt is 654.00 multiplied by 1.10, which is BDT 719.40. At 15 percent, it would be 654.00 multiplied by 1.15, which is BDT 752.10. One formula, no solving backwards, no hidden margin.
Show profit as its own line even on internal sheets, and especially on internal sheets. Hiding profit inside the fabric or CM line makes margin analysis impossible: when the order closes, nobody can tell whether the factory earned its margin or lost it to a cost overrun. An open profit line turns every closed order into a variance report, because actual cost can be compared block by block against the quoted sheet.
6. The Risk Buffer Is Not Profit
A risk buffer is a separately labelled percentage added to the cost base to absorb the things that will go wrong: a fabric surcharge, a rework lot, an extra inspection. It is not profit, and it must not be mixed into the profit line. Take the same shirt at a 2 percent buffer: 654.00 multiplied by 0.02 is BDT 13.08, giving a buffered cost of 654.00 plus 13.08, which is BDT 667.08. Profit at 10 percent of the buffered cost is 667.08 multiplied by 0.10, which is BDT 66.708, rounded half-up to BDT 66.71. The buffered FOB price is 667.08 plus 66.71, which is BDT 733.79 per garment.
If nothing goes wrong, the buffer becomes extra margin and the factory earns 733.79 against a true cost of 654.00. If a fabric surcharge of BDT 13.00 per garment arrives, the buffer absorbs it and the profit line survives untouched. Without the buffer, the same surcharge comes straight out of profit, and a BDT 65.40 margin becomes BDT 52.40. The buffer line costs one row on the sheet and protects the whole order.
7. Second Style Check: Knit Polo Shirt, 5,000 Pieces
A template proves itself when it works on a second style without modification. Take a knit polo shirt order of 5,000 pieces, all figures illustrative: fabric BDT 280.00, trims BDT 62.00, CM BDT 78.00, printing BDT 15.00, commercial costs BDT 16.00. Add them: 280.00 plus 62.00 is 342.00; plus 78.00 is 420.00; plus 15.00 is 435.00; plus 16.00 is 451.00. The cost before profit is BDT 451.00 per garment.
Profit at 12 percent of cost is 451.00 multiplied by 0.12, which is BDT 54.12. The FOB price is 451.00 plus 54.12, which is BDT 505.12 per garment. The order total is 505.12 multiplied by 5,000, which is BDT 2,525,600. The same six blocks, the same order, the same formulas, a different style, a different margin. That is what a template is for: the method never changes, only the inputs change.
8. Cross-Foot Before Sending
Before any sheet leaves the factory, cross-foot it: re-add the rows to confirm the cost before profit, re-add the profit line, and re-multiply the per-dozen and order-total lines. The shirt sheet cross-foots as 654.00 plus 65.40 equals 719.40; 719.40 multiplied by 12 equals 8,632.80; 719.40 multiplied by 10,000 equals 7,194,000. If any of those three checks fails, the sheet has an error somewhere, even if every line looks reasonable on its own.
Then file the sheet with its source documents: the fabric quote, the trims sheet, the CM rate card, the washing and printing rates, and the commercial cost breakdown. A filed sheet is auditable months later, when the buyer disputes a charge or the owner asks where the margin went. An unfiled sheet is a memory, and memories do not survive audits.
9. Summary and Checklist
A complete FOB quotation sheet is six cost blocks plus profit, each priced from its own source, each shown on its own line, and each convertible to per-dozen and order-total figures. Build it in the same order every time. Show profit openly and keep the risk buffer on its own line. Cross-foot before sending and file the sheet with its sources. A sheet built that way survives a fabric surcharge, a buyer negotiation, and an audit, and it turns every closed order into a lesson about where the margin really went.
1. Complete FOB Quotation Sheet: Woven Casual Shirt, 10,000 Pieces (all figures illustrative)
| Cost block | Per garment (BDT) | Per dozen (BDT) | Order total (BDT) |
|---|---|---|---|
| Fabric (shell, lining, pocketing) | 414.00 | 4,968.00 | 4,140,000 |
| Trims and accessories | 86.00 | 1,032.00 | 860,000 |
| CM (cost of making) | 95.00 | 1,140.00 | 950,000 |
| Washing | 28.50 | 342.00 | 285,000 |
| Printing | 12.50 | 150.00 | 125,000 |
| Commercial costs | 18.00 | 216.00 | 180,000 |
| Cost before profit | 654.00 | 7,848.00 | 6,540,000 |
| Profit at 10 percent of cost | 65.40 | 784.80 | 654,000 |
| FOB price | 719.40 | 8,632.80 | 7,194,000 |
2. Second Style Check: Knit Polo Shirt, 5,000 Pieces (all figures illustrative)
| Cost block | Per garment (BDT) | Order total (BDT) |
|---|---|---|
| Fabric | 280.00 | 1,400,000 |
| Trims and accessories | 62.00 | 310,000 |
| CM (cost of making) | 78.00 | 390,000 |
| Printing | 15.00 | 75,000 |
| Commercial costs | 16.00 | 80,000 |
| Cost before profit | 451.00 | 2,255,000 |
| Profit at 12 percent of cost | 54.12 | 270,600 |
| FOB price | 505.12 | 2,525,600 |
Practical Commercial Flow
A woven casual shirt order of 10,000 pieces. Fabric BDT 414.00, trims BDT 86.00, CM BDT 95.00, washing BDT 28.50, printing BDT 12.50, and commercial costs BDT 18.00 per garment. Cost before profit is BDT 654.00. Profit at 10 percent of cost is BDT 65.40, giving an FOB price of BDT 719.40 per garment, BDT 8,632.80 per dozen, and a total order value of BDT 7,194,000.
Factory Real-Life Scenario
Scenario: A woven shirt factory in Gazipur quoted a casual shirt at BDT 690.00 FOB per garment, using a fabric rate copied from a previous season and no separate commercial cost line. During production the fabric supplier revised the price upward, testing and inspection charges arrived as separate bills, and the order closed at a loss even though the sewing floor hit its efficiency target.
Solution: The costing head rebuilt the quotation sheet with six separate cost blocks, each tied to a current supplier quote or rate card, added an explicit commercial cost line of BDT 18.00 and a 2 percent risk buffer line, and re-quoted the next style at BDT 733.79 per garment.
Impact: The next order closed with its margin intact despite a mid-production fabric surcharge, because the surcharge was absorbed by the buffer line instead of eating the profit line. The buyer accepted the sheet because every line could be traced to a source document.
Commercial Officer Best Practice
Keep one master quotation template with locked formulas and only the input cells editable. When the buyer changes the quantity, only the setup-heavy lines move, and the whole sheet re-prices without retyping.
Top Beginner Mistakes to Avoid
- Quoting from a remembered per-dozen rate instead of rebuilding the sheet from current input prices.
- Leaving out the commercial cost block and then paying testing, inspection, and documentation out of profit.
- Hiding profit inside the fabric or CM line, which makes margin analysis and buyer negotiation impossible.
- Forgetting the per-dozen conversion, so the buyer compares a per-piece price against a competitor per-dozen price.
- Adding a risk buffer without labelling it, so nobody knows whether the buffer is still available when a problem actually arrives.
Important Commercial & Trade Terminology (5 Terms)
A price basis under which the seller delivers the goods on board the vessel at the port of shipment and bears costs up to that point. The buyer bears freight and insurance beyond it.
💡 Note: The FOB price is the factory-gate-plus-export-handling price, not the landed price.The total of all cost blocks before profit is added. Profit percentages in this lesson are always applied to the cost base, never to the final price.
💡 Note: A 10 percent margin on cost is not the same as 10 percent of the selling price.The export-handling cost block: testing, inspection, documentation, forwarding, and bank-related allowances that are not part of making the garment.
💡 Note: Leaving this block out is the most common reason a quoted order loses money.A separately labelled percentage added to the cost base to absorb cost overruns such as fabric surcharges or rework, distinct from profit.
💡 Note: If the buffer is not used, it becomes extra margin. If it is used, profit is protected.Re-adding a sheet both across rows and down columns to confirm the totals agree before the sheet is sent.
💡 Note: A sheet that does not cross-foot has an error somewhere, even if every line looks reasonable.Interview Preparation Questions & Answers (4 Questions)
Master these high-frequency interview questions for Commercial Officer, Merchandising, and Export Executive roles.
Fabric, trims and accessories, CM (cost of making), value addition such as washing and printing, commercial costs, and profit. Every garment quotation must show all six, each priced from its own source document.
Frequently Asked Questions (4 FAQs)
Clear, beginner-friendly answers to the most common questions about the Commercial Department.
Key Takeaways & Summary Points
Executive Lesson Summary
A complete FOB quotation sheet is six cost blocks plus profit, each priced from its own source, each shown on its own line, and each convertible to per-dozen and order-total figures. Build it in the same order every time, cross-foot it before sending, and keep profit and risk buffer as separate lines. A sheet built that way survives a fabric surcharge, a buyer negotiation, and an audit.