FOB, MSRP, & LCL (OMG!) - How to Price Your Product

Learn all about how your product’s cost relates to pricing, how much retailers expect to earn on your product, and more. Here are a few key terms we talked about on this episode:

• Margin: the difference between the cost of your product and the selling price

• First cost: what you pay for your product. This might be what you pay to a manufacturer, or, if you make your product yourself, this would be the combination of the costs of your materials and labor.

• Freight cost: the cost to transport your product from the manufacturer to your warehouse (or garage, or basement!)

• Landed cost: first cost + freight cost

• MSRP: manufacturer’s suggested retail price, what you think your product should sell for online or in-store

• Shipping terms:

  • FOB: Free On Board - a product already delivered to a port (e.g., FOB Ningbo or FOB Mumbai) or to your location (FOB your warehouse)

  • EXW: Ex Works - product must be picked up from the manufacturer

  • FCL: full container load

  • LCL: less than container load (for example, you are shipping 1-2 pallets of product and then that will be consolidated with other freight)