How a China sourcing agent handles pricing under terms like FOB or DDP?

I have seen many importers feel confused when they try to compare quotes under different Incoterms, so I want to explain how I handle this question in a simple way.

I handle pricing under different Incoterms by adding or removing cost blocks in a clear structure. I show factory cost, logistics cost, import cost, and my service fee in separate lines, so the buyer can see how the total changes when switching from FOB to DDP.

Many buyers feel lost when they try to understand cost differences under Incoterms. I want to guide them through the logic behind the numbers, and help them gain confidence before they move forward.

Can I explain the cost breakdown for each term?

I face many cases where buyers do not know what is inside an FOB or DDP price, so I try to explain the structure in simple steps.

I explain the cost breakdown for each Incoterm by splitting the full price into factory cost, origin-side cost, international freight, destination-side cost, and service fees. I keep these parts visible in every quote, so the buyer can check what changes between EXW, FOB, DAP, and DDP.

When buyers ask about cost breakdowns, I try to give them a full and simple view. Many importers receive quotes that mix different cost levels. They then cannot see where the money goes. They may think the supplier hides charges or inflates logistics. A clear breakdown solves this concern.

I explain each block step by step:

• Factory charges
• Inland trucking
• Export clearance and documents
• Port fees and terminal handling
• International freight (sea or air)
• Destination charges, customs broker fees, duty, and tax
• Domestic delivery (for DAP or DDP)
• My service fee (shown clearly)

Factory cost and packaging

Factory cost is the base. It includes raw materials, labor, and basic packaging. When buyers compare different factories, this is the main part that changes. My job is to check if the price matches the product level.

I check product specifications, packing style, box strength, and carton size. These items affect freight cost later.

Inland transport and origin-side fees

Many buyers do not know that inland trucking, export documents, and port charges vary by port. I confirm each fee with local forwarders.

If a buyer wants FOB, this part is important. It decides the final FOB uplift.

International freight

This part moves fast in the market. Sea freight changes by season. Air freight changes by weight and time.

I explain that freight has a validity period and is not fixed forever. Buyers who understand this can plan long-term orders better.

Destination charges and import fees

This part includes customs brokers, duties, taxes, and terminal fees.

For DDP, I confirm these items with my overseas partners. Some online quotes claim DDP but do not include real duties. I check these details to avoid hidden risk.

Why clarity matters

Clear breakdown helps the buyer choose between FOB and DDP.

• Buyers with their own forwarder prefer FOB
• Buyers who want door-to-door service may choose DDP

Clear cost charts build trust for long-term cooperation with a China sourcing agent.

How do I calculate DDP to the client’s door?

Sometimes buyers expect DDP to be simple, but many parts affect the final price.

I calculate DDP by gathering exact costs from forwarders for:

• Origin handling
• International freight
• Destination clearance
• Duties and taxes
• Final delivery

I then add a risk buffer and recheck all items before sending the quote.

When building a DDP quote:

• I confirm the HS code (duty depends on classification)
• I confirm the export port (fees vary by port)
• I confirm freight rates (they change weekly)
• I confirm volumetric weight for air shipments
• I confirm destination rules and port fees
• I explain whether duties are fixed or estimated

Importer of record

For DDP, someone must act as importer of record. In some countries, only local companies can do this.

If my partner cannot do this legally, I do not offer DDP. Safety and compliance come first.

Duty and tax calculation

I calculate duty and tax using:

• HS code
• Declared value
• Country import rules

I advise buyers to follow correct rules. Low declared value often causes delays and inspections.

Local delivery

Local delivery depends on:

• Distance
• Weight
• Country regulations

Some areas have remote surcharges or special unloading needs. I confirm these early.

Risk buffer

DDP carries the highest risk. Customs checks, freight changes, or delays increase cost.

I add a buffer and show it clearly to the buyer. I do not hide it.

Why DDP is sometimes higher

DDP includes all steps, more work, and more risk.

Many suppliers increase prices by 15–30% for DDP. Buyers should understand this reflects real cost and responsibility.

Do I help buyers choose the right Incoterm?

Yes. I guide buyers by understanding their logistics ability and experience.

I ask about:

• Freight forwarder contacts
• Customs experience
• Delivery needs
• Cost-control goals

Then I compare FOB, CIF, DAP, and DDP in simple charts.

When FOB is better

FOB works well if the buyer:

• Has a strong forwarder
• Wants freight control
• Consolidates multiple suppliers
• Seeks lower long-term cost

Many experienced importers choose FOB.

When DDP is better

DDP works well if the buyer:

• Is new to importing
• Wants simple door-to-door service
• Needs fixed landed cost
• Faces complex customs rules

When DAP fits better

DAP is useful when the buyer:

• Wants delivery to the door
• Prefers to pay duties and taxes themselves

Other factors I check

• Product type (high value vs normal goods)
• Shipment size
• Delivery urgency
• Buyer’s country regulations

Some countries do not accept DDP from foreign companies. I check this early.

Why guidance matters

Correct Incoterm choice helps buyers:

• Control cash flow
• Avoid delays
• Reduce customs risk
• Build stable import routines

It also helps me as a China sourcing company build long-term cooperation.

How do I align Incoterms with local logistics providers?

I align Incoterms with logistics providers by confirming:

• Handover point
• Required documents
• Customs responsibility
• Delivery conditions

I make sure everyone understands the same process before shipping starts.

If a buyer chooses FOB, the factory must handle export clearance. Some factories misunderstand this. I clarify all inclusions early to avoid delays.

Document alignment

I confirm document requirements such as:

• Packing list format
• Commercial invoice wording
• HS codes
• Carton labels

Timing alignment

I manage:

• Port cut-off times
• Airline labeling rules
• Express pickup schedules

Customs alignment

For DDP, partners must know:

• Correct HS codes
• Duty rates
• Import procedures

If rules change, I update the buyer immediately.

Communication alignment

I clearly explain:

• Who handles export clearance
• Who handles import clearance
• Who arranges trucking

Clear roles avoid confusion and extra charges, and support long-term China sourcing and logistics projects.

Final Thoughts

Clear Incoterm pricing builds trust. It helps buyers plan better and avoid unnecessary risk.

Footnote

1. FOB Incoterms: Free on Board Explained – Guided Imports
2. Incoterms FOB – Free on Board | AIT WW
3. Free on Board (FOB) Explained: Who's Liable for What in Shipping?
4. Know Your Incoterms – International Trade Administration
5. FOB (Free on Board) – Incoterms® 2020 Rule [Updated 2025]
6. DDP Incoterms | Delivered Duty Paid Explained – Guided Imports
7. For those that have bought directly from China, would you use CIF …
8. FOB Free On Board – Incoterms – Crane Worldwide Logistics
9. Incoterm: Delivered Duty Paid (DDP) Shipping Explained – IncoDocs
10. How to Get Precise Quote? Which Trade Term Works Best?