FOB vs CIF Calculator
Enter goods value, origin charges, freight, insurance and destination charges for both FOB and CIF scenarios to compare total landed costs side by side. Shows which Incoterm produces a lower all-in cost and the saving difference.
Compare the total landed cost under FOB (buyer arranges freight and insurance) versus CIF (seller arranges freight and insurance). Enter both scenarios to see which Incoterm gives a lower all-in cost.
Invoice value at factory/origin
Inland transport, export docs, loading
FOB — buyer arranges
Buyer-sourced ocean/air freight
Port fees, customs broker, delivery
CIF — seller arranges
Freight component of seller's CIF price
Customs duty, broker, last mile
Formula
FOB landed cost = Goods + Origin charges + Buyer's freight + Buyer's insurance + Destination charges | CIF landed cost = (Goods + Origin charges + Seller's freight + Seller's insurance) + Destination charges
Under FOB, the buyer is responsible for arranging and paying for international freight and insurance from the port of loading. Under CIF, the seller includes freight and insurance in the CIF price — but the buyer pays destination charges. The total landed cost is the same components — what differs is which party negotiates and controls each element.
Worked Example
Goods EXW $50,000 · Origin charges $800 · Buyer's freight $2,200 · Insurance $150 · Destination $600 vs CIF price with seller's freight $2,600 · Insurance $200 · Destination $400.
FOB landed = $50,000 + $800 + $2,200 + $150 + $600 = $53,750
CIF landed = ($50,000 + $800 + $2,600 + $200) + $400 = $54,000
FOB is lower by $250
In this example, buying on FOB and negotiating your own freight contract saves $250. The advantage reverses if the seller has better freight rates — always compare with actual quotes from both sides before negotiating terms.
Use this in your workflow
Use the Incoterms Cost Split Calculator to compare all 11 Incoterms across buyer and seller responsibilities. Use the Customs Value Calculator to compute CIF customs value for duty purposes. Feed the result into the Landed Cost Calculator for full import landed cost per unit. Browse all Free Business Calculators.
When to use this calculator
- →Deciding whether to buy on FOB or CIF when negotiating a new supplier contract
- →Checking whether a seller's CIF price is competitive versus arranging your own freight
- →Building a landed cost model for sourcing decisions where freight terms vary by supplier
- →Understanding the impact of freight term choice on customs value and duty liability
Worked example: FOB vs CIF for a furniture shipment
A useful reference before entering your own figures above.
| Cost component | FOB | CIF |
|---|---|---|
| Goods value (EXW) | $50,000 | $50,000 |
| Origin charges | $800 | $800 |
| FOB value | $50,800 | — |
| International freight | $2,200 (buyer) | $2,600 (seller) |
| Cargo insurance | $150 (buyer) | $200 (seller) |
| CIF value | — | $53,600 |
| Destination charges | $600 | $400 |
| Total landed cost | $53,750 | $54,000 |
In this example, the buyer's freight rate ($2,200) is $400 lower than the seller's CIF freight component ($2,600), making FOB the lower-cost option by $250 after accounting for the difference in destination charges.
Limitations
This calculator compares landed cost based on entered values — it does not model customs duty on CIF value, import VAT, or differences in insurance coverage quality. Under CIF, the seller typically provides minimum insurance (Institute Cargo Clauses C), while the buyer under FOB may arrange broader coverage. Under CIF, the seller selects the carrier — buyers should always verify carrier identity and obtain the bill of lading. For duty-sensitive imports, model the customs value impact separately. These results are for planning and negotiation purposes only — not contractual or legal advice.
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Frequently asked questions
What is the difference between FOB and CIF?
Under FOB, the seller loads goods on the vessel at origin. The buyer pays for freight and insurance from that point. Under CIF, the seller pays freight and minimum insurance to the destination port. Both terms leave destination charges with the buyer.
Is FOB or CIF better for the buyer?
It depends on freight rate leverage. Buyers with strong carrier relationships often prefer FOB for lower rates and greater control. Less experienced importers may prefer CIF for simplicity — though they pay the seller's freight margin and lose control over carrier selection.
How does FOB vs CIF affect customs duty?
Most countries assess duty on CIF customs value. Under CIF, the CIF invoice value is the customs value. Under FOB, the buyer must add freight and insurance to calculate CIF customs value. Practically, the customs value should be the same under both terms for the same shipment.
What are origin charges?
Costs at or before the port of origin: inland transport, export docs, container loading (THC), and freight forwarder fees. Usually borne by the seller under FOB and CIF.
What are destination charges?
Costs at or after the destination port: customs clearance, import duty and VAT, broker fees, and inland delivery. The buyer pays these under both FOB and CIF.
What insurance does CIF include?
CIF requires the seller to provide minimum insurance under Institute Cargo Clauses C — a restricted, named-perils policy. Buyers who want broader coverage (All Risks / ICC A) should arrange their own policy regardless of the Incoterm.