🧾 How to Calculate Export Pricing: EXW, DDP, FOB, CFR Explained

When selling products internationally, choosing the right Incoterm is crucial — it determines how much of the shipping cost and risk you, as the exporter, are responsible for. To price your goods correctly, you must understand how to calculate your export pricing based on the selected Incoterm.

In this article, we’ll cover how to calculate export pricing for the following Incoterms:

• EXW (Ex Works)
• DDP (Delivered Duty Paid)
• FOB (Free On Board)
• CFR (Cost and Freight)

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1. 📦 EXW – Ex Works

Definition: The buyer takes responsibility for all costs and risks once goods leave the seller’s premises.

Calculation Formula:

EXW Price = Factory Cost + Profit Margin

✅ Includes:

• Raw materials
• Manufacturing costs
• Packaging
• Seller’s profit

🚫 Excludes:

• Inland transport
• Export customs clearance
• Freight or insurance

💡 Example:

• Factory cost: $100
• Profit margin: $20
  👉 EXW Price = $120

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2. 🚚 DDP – Delivered Duty Paid

Definition: The seller delivers the goods to the buyer's door, paying all costs, including duties and taxes.

Calculation Formula:

DDP Price = EXW + Inland Freight + Export Clearance + Freight + Insurance + Import Duties/Taxes + Local Delivery

✅ Includes everything from the factory to the final destination.

💡 Example:

• EXW: $120
• Inland freight: $20
• Export clearance: $10
• Ocean freight & insurance: $50
• Import duty/tax: $30
• Local delivery: $20
  👉 DDP Price = $250

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3. ⚓ FOB – Free On Board

Definition: The seller covers all costs until the goods are loaded onto the shipping vessel at the port of origin.

Calculation Formula:

FOB Price = EXW + Inland Transport + Export Clearance + Terminal/Port Handling

✅ Includes:

• Domestic transport to port
• Export paperwork
• Port charges

💡 Example:

• EXW: $120
• Inland transport: $20
• Export clearance: $10
• Port charges: $10
  👉 FOB Price = $160

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4. 🌊 CFR – Cost and Freight

Definition: The seller pays for the goods and their transport to the destination port — insurance is not included.

Calculation Formula:

CFR Price = FOB + International Freight

✅ Includes:

• All costs up to arrival at the destination port

🚫 Excludes:

• Insurance (CFR ≠ CIF)

💡 Example:

• FOB: $160
• Freight: $40
  👉 CFR Price = $200

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✅ Quick Summary Table

Incoterm	Seller Pays For	Buyer Pays For
EXW	Factory cost only	Everything else
FOB	Up to loading on ship	Freight, insurance, import duties
CFR	Freight to destination port	Insurance, import duties
DDP	Everything (door-to-door)	Nothing

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Final Tips for Exporters:

• Always confirm local regulations when quoting DDP prices.
• Work with a freight forwarder to get current rates.
• Provide a cost breakdown to keep pricing transparent for your buyer.

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Need help setting your export prices or choosing the right Incoterm? Drop your questions in the comments below or get in touch with us!

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