Who pays the freight on FOB origin?

Who pays the freight on FOB origin?

“FOB shipping point” or “FOB origin” means the buyer is at risk once the seller ships the product. The purchaser pays the shipping cost from the factory and is responsible if the goods are damaged while in transit.

What is FOB in pricing strategy?

In a widely used geographic pricing strategy, the seller quotes the selling price at the point of production and the buyer selects the mode of transport and pays all freight costs. Usually referred to as FOB factory pricing, this strategy is the only one in which the seller does not pay any of the freight costs.

What does the term FOB origin mean?

FOB Terms: FOB Origin, Freight Collect “FOB Origin” refers to the legal fact that the buyer assumes title of the goods the moment the freight carrier picks up and signs the bill of lading (BOL) at the origin pick-up location.

Who pays for shipping on FOB?

FOB freight prepaid and allowed specifies that the seller is obligated to pay the freight transportation charges and owns the goods while they are in transit. The seller assumes the risk of loss of or the damage of goods during transit. The title of goods passes to the buyer at the buyer’s business location.

Does FOB price include shipping?

In shipping arrangements classified as FOB Destination, Freight Collect, the buyer is responsible for shipping costs. In FOB Destination, Freight Prepaid & Add arrangements, the seller pays for the shipping costs but then passes on the cost to the buyer.

Does FOB Mean delivered price?

Origin” term of sale or an “F.O.B. Destination” term of sale is that the price of the goods sold in an “F.O.B. Destination” contract is a “delivered price” where the cost of transportation is “built in” to the price.