DDP vs FOB vs EXW: A Real Cost Comparison
EXW is the lowest quoted price and the most work. FOB is the standard middle ground for US importers. DDP is the highest quoted price and the least control. Below, the same order is quoted all three ways so you can see what each actually costs. For most small importers, FOB wins on both cost and effort.
This page is about money, not definitions. If you need the rules themselves — who clears export, where risk transfers, what all eleven terms cover — our free Incoterms 2020 chart lays them out on one page. Come back here for what they actually cost.
Same Shipment, Three Quotes
500 LED desk lamps, Shenzhen to a warehouse in Los Angeles. Here is what the three quotes look like and what you end up actually paying.
| Line item | EXW | FOB | DDP |
|---|---|---|---|
| Quoted price from supplier | $3,950 | $4,200 | $8,020 |
| Factory loading + inland to port | $210 | included | included |
| Export clearance | $120 | included | included |
| Origin terminal handling | $95 | included | included |
| Ocean freight | $610 | $610 | included |
| Insurance | $32 | $32 | included |
| Destination terminal handling | $140 | $140 | included |
| Customs brokerage + ISF | $170 | $170 | included |
| Duty, tariffs, and federal fees | $1,778 | $1,778 | included |
| Drayage to warehouse | $285 | $285 | included |
| Wire + FX | $68 | $68 | $68 |
| Total you actually pay | $7,458 | $7,283 | $8,088 |
| Per unit | $14.92 | $14.57 | $16.18 |
Three observations from that table.
EXW's lower quote does not survive contact with reality. The $250 you saved on the quote costs you $425 in origin-side charges you now have to arrange and pay yourself, in a country where you have no leverage and probably no local agent. EXW ends up more expensive than FOB here, and it is significantly more work.
DDP is roughly 11% more expensive per unit than FOB in this example, a difference of $1.61 on every lamp. That premium is the supplier's margin on the logistics they arranged, plus a buffer they built in for risks they are now carrying.
FOB wins on cost and on effort, which is why it is the default for most US importers buying from Asia.
Run these three scenarios on your own product before you commit. Our landed cost spreadsheet for importers lets you build all three columns side by side.
Why DDP Quotes Look Cheaper Than They Are
DDP is seductive because it is one number. No forwarder to hire, no broker to find, no customs paperwork. For a first-time importer that simplicity is worth something real.
What you give up is visibility, and the specific thing you cannot see is how your goods were declared to customs.
Under DDP the supplier or their agent arranges the import entry. You are frequently still the importer of record on paper, or become responsible in practice, without ever seeing the declared value or the HTS code that was used. If the shipment was undervalued or misclassified to keep the DDP price competitive, the exposure is yours, not the supplier's — and it surfaces months later when you have no documentation to defend yourself with.
If you use DDP, insist on receiving a copy of the entry summary. A supplier who will not provide it is telling you something.
The Hidden Risk in EXW
EXW's problem is not cost. It is that risk transfers at the factory door.
The goods become yours before they are loaded onto a truck. If they are damaged during loading, or the truck is in an accident on the way to the port, or export clearance fails because paperwork was wrong, that is your loss and your problem to solve in a country you are probably not standing in.
EXW also requires you to appoint an agent in the origin country to handle export clearance, because in most cases a foreign buyer cannot file it directly. Many importers who agreed to EXW discover this only after the order is placed.
EXW makes sense when you already have a reliable agent at origin, or when you are consolidating from several suppliers into one shipment and need control of the goods early. Outside those cases, it buys you a lower quoted number and a longer list of things that can go wrong.
When to Choose Each One
| Choose | When |
|---|---|
| FOB | Your default. You want control of the main freight leg and visibility into your own customs entry, without handling origin-country logistics. |
| EXW | You have a trusted origin agent, or you are consolidating multiple suppliers into one shipment. |
| DDP | First shipment, small test order, or you are genuinely not ready to appoint a broker. Treat it as training wheels, and get the entry documents. |
Frequently Asked Questions
Under DDP, who is the importer of record?
It varies, and this is exactly the part to nail down in writing before you order. Some DDP arrangements name the supplier's agent, some quietly name you. Ask directly, get the answer in the contract, and ask for the entry summary after clearance.
Can I negotiate a different Incoterm after the quote?
Yes, and you should if the first quote came in EXW. Ask the supplier to requote FOB. Most will, and the difference between the two quotes tells you exactly what they charge for the origin leg — which is useful information whichever term you end up using.
Which Incoterm gives me the lowest duty?
The Incoterm does not set the duty rate, but it can affect the declared customs value if freight gets bundled into the invoice price. Keep goods value and freight on separate lines regardless of term. Our guide on calculating import duty covers how the valuation basis works.
Last updated: September 10, 2026.