There are a couple of good things to keep in mind when you are requesting quotes from new vendors. The first is always to clarify terms of the quotations, whether FOB or Ex-Works. I find that many vendors will provide you with Ex-Works prices because they are usually, though not always, much lower than FOB prices. It is easy to look at the seductively low costs and think you have hit your targets, only to realize later that those costs do not include transportation to the port (FOB) and that in order to get those costs you have to pick up the order at the factory (Ex Works). Additionally I think even if you see the FOB clearly on the quote sheet it is a good idea to confirm the terms with the vendor in a separate email. Vendors make mistakes too In fact just the other day a vendor quoted me FOB and then a few days later he came back and told me the prices were in fact Ex Works. The inspiration for this post.
Always remember that prices are good for a limited period only. Most vendors hold prices for a month or two. Some vendors will hold prices for up to 6 months. But after that time you can expect your prices to go up. If your margins are really tight then don’t plan your business on quotes that will probably have gone up by the time you get around to placing an order with your vendor in China. A case in point is a customer of mine who got good pricing on his product in June of 2012. But he wasn’t ready to place the order. The vendor held the pricing for 6 months but my customer was still not ready to order. By the time my custoemr was ready to place an order the cost had gone up $ 2.00 effectively making the product too expensive for him. The best position to be in is one where you get good pricing from a vendor and you are in ready to place the order as soon as samples have been approved.