The FOB Price Buildup, Line by Line
Between CM and the FOB price on the offer sheet lies a stack of costs that each look small and together decide whether the order earns anything. FOB buildup is the discipline of stacking them explicitly, and its enemy is the single mysterious percentage that factories add for everything else.
The stack, named
Start with fabric: consumption per garment times price, with wastage stated as its own line rather than hidden in consumption. Trims and accessories from the bill of materials, priced per garment. CM from first principles. Then the lines that the mysterious percentage usually swallows: embellishment (print, embroidery, wash) at actual process cost; testing and inspection charges; commercial costs of the shipment (documentation, port handling, local freight to port); financing cost of the cash cycle, because money tied up for ninety days is not free; and rejection allowance at your measured rate, not a hopeful two percent.
Each line on its own row, each with its source. The FOB cost buildup calculator holds the structure so nothing is forgotten in the meeting.
Why the mysterious percentage fails
Adding twelve percent for overheads and things feels safe and is the opposite. It overcharges simple orders, losing them to sharper quotes, and undercharges complicated ones, winning exactly the business that hurts. The percentage also hides drift: when testing fees rise or the wash price changes, nothing in the costing sheet forces the update, and the sheet keeps quoting last year's world.
Wastage is a decision, not a constant
The fabric line deserves special honesty. Consumption times price is arithmetic; the wastage percentage on top is a claim about your cutting room. If markers run at 82 percent and the sheet assumes 88, the order loses fabric money invisibly on every lay. Tie the number to what the floor measures, the discipline from the marker efficiency piece, and revisit it when the cutting room improves; a better marker room should show up as sharper quotes, or the improvement bought nothing commercially.
The margin line, stated last and alone
After the honest stack, margin goes on as its own visible decision. This is the cultural point of the whole exercise: when every cost is named, margin stops being whatever is left and becomes what you chose. Orders can then be compared on the same basis, the thin ones knowingly accepted for strategic reasons or declined, and the offer sheet becomes a record of decisions rather than an artifact of habit.