What Does FOB Mean in Garment Manufacturing?
FOB stands for Free on Board (sometimes written as Freight on Board). In garment manufacturing, FOB price means the cost of a finished garment loaded onto a shipping vessel at the port of origin — typically a port in China, Vietnam, or another manufacturing country.
FOB price includes the cost of fabric, production labor (CMT), trims, packaging, and inland transportation from the factory to the port. It does not include ocean freight, customs duties, import taxes, or delivery to your warehouse.
What FOB Includes vs. What It Doesn't
Understanding the boundary of FOB pricing is essential for calculating your true landed cost — the actual cost of getting a finished garment into your hands.
FOB price covers fabric sourcing and dyeing, cutting, sewing, and finishing (CMT), trims (labels, tags, elastic, packaging), quality inspection at the factory, and transportation from the factory to the shipping port.
FOB price does not cover ocean or air freight from the port of origin to your country, customs duties and import tariffs (which can add 15 to 32 percent depending on the garment type and country of origin), customs brokerage fees, domestic freight from port to your warehouse, or compliance testing (in some cases this is included, but confirm with your manufacturer).
Why the Distinction Matters
When a manufacturer quotes you $8.00 per unit FOB, your actual cost to hold that garment in your warehouse is significantly higher. For a children's bamboo pajama set at $8.00 FOB shipped from China to North America, a realistic landed cost calculation adds approximately $0.50 to $1.00 for freight per unit (sea freight), $1.20 to $2.50 for customs duties (15 to 32 percent depending on HS code and destination country), $0.05 to $0.15 for brokerage fees per unit, and $0.10 to $0.30 for domestic freight.
Total landed cost: approximately $9.85 to $11.95 — roughly 23 to 49 percent above the FOB price.
Founders who set their retail prices based on FOB cost rather than landed cost systematically underestimate their cost structure and end up with thinner margins than planned.
Other Pricing Terms You'll See
EXW (Ex Works) means the price at the factory door. You're responsible for everything from that point forward, including inland transportation to the port. EXW prices look lower than FOB but shift more logistics cost and responsibility to you.
CIF (Cost, Insurance, and Freight) means the price includes ocean freight and insurance to a named port in your country. It doesn't include customs duties, brokerage, or domestic delivery. CIF gives you a better picture of your pre-duty cost but is less common in sleepwear manufacturing quotes.
DDP (Delivered Duty Paid) means the manufacturer handles everything including freight, duties, and delivery to your door. This is the simplest for you as the buyer, but the manufacturer builds their margin into every logistics step. It's less transparent and usually more expensive than managing logistics yourself.
For most sleepwear brands, FOB pricing combined with your own freight and customs broker gives you the best balance of cost transparency and control.
For a complete cost breakdown of sleepwear manufacturing, read:
What Does It Actually Cost to Manufacture Sleepwear?
We quote full-package FOB pricing with complete transparency — every cost line itemized so you can calculate your true landed cost with confidence.