Thank you for your question.

FOB Price as in $2.95 FOB Port of Loading means that the shipper will deliver the goods to the ship or to the carrier. You will pay for the freight + Insurance of the goods until it arrives to the Port of Destination. This is usually charged to you by the carrier before you can claim the documents of your shipment. FOB is short for Free On Board.

Additional costs that you might incur will be customs duties (if any), Brokerage and other costs of transporting the goods from the pier to your warehouse.

All these when summed up will be your total cost of delivery. Add these to the cost of your goods and you have your total cost. You may also include the cost of communications, i.e. phone calls, fax, the Fedex samples, etc. to be more precise.

With all these summed up, you may calculate the margin of profit you intend to make. In our experience, importers usually sell their merchandise on wholesale prices based on 100% of the cost. Retail prices usually are calculated 250 - 300 %. The prices however are governed by the market conditions. If the product has many competition, or similar items already in your market, then you will have to reduce the prices to allow you to compete.

There is no specific formula because the operation involves simple arithmetic. If your shipping costs becomes so high (as in using Fedex or shipping by Airfreight) your costs might make you uncompetitive. In our case, we usually use the Postal Service Global Priority Mail for US. If you have a similar service to Canada, ask your supplier to check it out at their Post Office. You may also check it out at your end so that you can send your samples to be copied via the postal service to save on freight costs. The delivery time maybe a little longer but it is definitely cheaper.

Additionally, if you are importing your goods in small quantities, try to contact a forwarding company who may have agents in the country where you are importing. Many forwarders also act as consolidators, i.e., they gather small shipments from different shippers and consolidate them into one 20 feet or 40 feet containers. Then they ship the containers by SEA freight. Costs are far cheaper than using AIR freight. Although the shipping time may take longer because there might not be enough cargo to consolidate and shipped to your destination. Shipping time normally goes to about 30 to 90 days, however, you may program delivery to your customers using that time frame. If this is not possible, the Postal Service is our best alternative.

Hope this helps.

About the PowerHomeBiz.com Guide: 

Nach Maravilla is the Publisher of Power Homebiz Guides. He has over thirty years experience in sales and marketing of various products, which covered as he jokingly describes, "from toothpicks to airplanes"  He also had extensive experience in International trading and he always excelled in special promotional ideas for  retail outlets. 

The opinions expressed in this column are those of the author, not of PowerHomeBiz.com. Users should not treat the Guide's response as legal, accounting, or professional advice as all answers are intended to be general in nature. Such advice can only be properly given by qualified professionals who are fully aware of a user's specific geographical areas or circumstances, such as an attorney or accountant.