In brief
Apparel landed cost is the full cost of getting a garment to your door: first cost, duty, freight, insurance, brokerage, testing and any agent fees. Comparing factories on FOB alone hides those costs, along with the price of delays, quality failures and markdowns. SBS Fashion asks for the price point in a sourcing brief; its website does not list prices.
What the quote leaves out
Put two quotes side by side and the lower one looks like the answer. An FOB quote covers the garment and its delivery onto a vessel at the origin port: fabric, trims, cutting and sewing, factory overhead and margin, and haulage to the port. Everything after that is yours, and none of it is on the page.
Add the duty, at the rate for that classification and that origin. Add ocean or air freight, insurance, customs brokerage, port fees and trucking to your warehouse, then testing, inspection, any agent’s commission and the samples. Lay it out per unit for each country and factory you are considering, with current figures.
A worked example
The numbers here are invented to show the mechanics. Factory A quotes $10.00 FOB from a country facing 30 percent duty, with freight of $0.60 per unit. Factory B quotes $11.50 from a country facing 16 percent, with freight of $0.40.
Factory A lands at $13.60 and Factory B at $13.74.
A gap of $1.50 at FOB has become 14 cents, before anyone has asked which of the two can ship four weeks sooner, or which passes inspection the first time.
Duty is a design decision
The US general rate on a cotton T-shirt is 16.5 percent. On a man-made fiber T-shirt it is 32 percent, before any additional duties that apply by country. Fiber content, knit or woven construction and even gender classification move garments between tariff lines, which means the person choosing the fabric is also choosing the duty. Put your broker in the development meeting, or at least on the email.
If you buy through a trading company, ask your broker about first sale valuation. In the right circumstances it lets you declare duty on the factory’s price to the middleman instead of the price you paid.
The costs that never reach the spreadsheet
The comparison above still flatters the cheaper option. It assumes everything goes to plan. Late goods mean air freight, a chargeback or a missed window and a markdown. Quality failures bring rework, returns and the loss of a customer’s next purchase.
Long lead times cost money too. You commit to a buy earlier, on a worse forecast, and end up with too many of what doesn’t sell and too few of what does. A factory with a lower price and a higher minimum may leave you holding stock you didn’t want, paid for from the day it shipped.
Cost gets decided in development
Most of a garment’s cost is fixed long before a factory quotes. Fabric is typically among the largest parts of it, and width, weight and how efficiently the pattern sits on the marker all count. An extra seam, a contrast binding, a fifth color in a print or a custom trim on a small order each look trivial in a meeting and show up on every unit.
Ask for the standard minutes behind a making charge. Negotiating pennies at the factory comes after all of that, and by then most of the money has been spent.
The cost of money
Terms are part of the price. Many factories want a deposit when the order is placed and the balance before goods ship, and you carry a large share of the cost for months before a unit sells. A letter of credit or open account changes that picture, and a slightly higher price on better terms can be the cheaper deal once you count what your cash costs.
