Cost Price

Cost Price in foreign trade typically refers to the total direct costs a seller incurs to produce or procure goods, including raw materials, labor, and manufacturing overhead, but excluding profit, commission, domestic freight, export duties, and international freight. It is commonly used for internal costing, as a basis for quotation, or to explain the floor price during negotiations with customers. Usage scenarios include: factories quoting to exporters, exporters calculating the minimum acceptable price, and negotiating price composition with buyers. Note: Cost price is not equal to export quotation, which requires adding expenses and profit; cost definitions may vary between companies (e.g., whether tax or administrative fees are included), so clear definition is necessary; unlike trade terms such as FOB and CIF, cost price only reflects the cost of the goods themselves and does not involve delivery conditions. It is similar to 'ex-works price,' but ex-works price may include profit, whereas cost price usually does not. Difference from 'break-even price': break-even price equals cost price plus necessary expenses, resulting in neither profit nor loss. Foreign trade practitioners should clearly distinguish cost price from selling price to avoid losses caused by confusion.