What is the ex-factory price?
Ex-factory price refers to the price charged by the seller at the factory gate. It’s the price the customer needs to pay for buying and taking the goods out of the factory. It does not include the cost of transportation, customs clearance, export duties, import duties, or any other cost related to goods.
As the same ex-factory suggests, this cost is to ex-exit the goods from the factory gates.
Advantages of using ex-factory price
The following include advantages .
- This term is easy to understand for both seller and buyer. The seller clearly states that their responsibility is limited to exiting goods from the factory gate.
- It is highly beneficial for the seller as they have nothing to do with the transportation, duties, clearance, etc.
Disadvantages of ex-factory price
The following includes disadvantages.
- The buyer may not be familiar with the clearing process in the country of origin, which can make it highly challenging from the customer’s perspective.
- The buyer may face problems/challenges when moving goods from the factory to the port.
Conclusion
Ex-factory price refers to the price paid for getting goods from the factory. It does not include the cost of transportation, carriage, duties, taxes, and other trade-related details.
The advantage of using this term in the contract is clearance for both buyer and seller. However, this might create a problem for the buyer as they may not be familiar with the trade formalities in the country of origin.
Daniyal is passionate about simplifying complex accounting concepts, Founded Accounting with Clarity to share practical insights, technical guidance, and real-world finance advice that empower professionals and business owners to make informed decisions with confidence.