FOB vs Delivered Pricing in Wholesale: Landed Cost Explained
FOB pricing means the price on your quote stops at a handoff point, usually the distributor's dock. You pay the freight from there. Delivered pricing means freight is already built into the price, so the quote is your cost at the door. To compare the two fairly, you have to turn both into landed cost per unit.
This is where resellers lose money. Two distributors quote you the same product. One says $10.00 a unit, the other says $10.60 delivered. Most resellers take the $10.00 quote, and a few weeks later the freight bill eats the savings. The cheaper number on paper isn't always cheaper once it's sitting in your warehouse.
This post breaks down what both terms mean, who carries the risk under each, and the one calculation that makes any two quotes comparable. It's part of our supplier operations hub.
What Is FOB vs Delivered Pricing in Wholesale?
Start with FOB. It stands for "free on board," though nobody thinks about the words anymore. In US wholesale, FOB marks the spot where the goods stop being the distributor's problem and become yours. The two versions are mirror images.
FOB Origin vs FOB Destination: Who Pays Freight and Who Owns the Risk
FOB origin (you'll also see "FOB shipping point") means the goods become yours the moment the carrier picks them up at the distributor's dock. From that second on, you pay the freight and you carry the risk. If the truck crashes somewhere in Kansas, that's your claim to file, not theirs. The quote covers the product only. Freight is a separate bill.
FOB destination flips it. The distributor owns the goods, and the risk, until the shipment reaches your door. They pay the freight and usually build it into their price.
Delivered pricing is the simple one. One all-in number, freight already inside. The quote is what the product costs standing at your dock.
Frequently asked questions
Does FOB mean the buyer or the seller pays shipping?
Neither, automatically. FOB decides who owns the goods and carries the risk in transit; the freight term, collect or prepaid, decides who gets billed. FOB origin usually means the reseller pays, FOB destination usually the distributor. Confirm both in writing.
Is delivered pricing the same as FOB destination?
They usually travel together but answer different questions. Delivered means freight is inside the price; FOB destination means risk transfers at your dock. A delivered quote is typically FOB destination with freight prepaid, so check the purchase order states both.
What's included in an FOB price vs a delivered price?
An FOB origin price covers the product alone, with freight billed separately. A delivered price bundles product and freight into one number.
The B2B SupplierHub Team
Wholesale & sourcing
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