1. Calculation of domestic total cost
The domestic total cost includes the cost of purchasing goods from domestic suppliers (tax included), the domestic expenses of transporting goods to the port (place) of shipment (including the company’s comprehensive business expenses, inland freight, customs clearance fees, port miscellaneous fees, etc.), and the subsequent export tax rebate income must be deducted. Therefore, the calculation formula is as follows:
Domestic total cost = procurement cost + domestic expenses – export tax rebate = [procurement cost/(1+VAT rate)] x tax rebate rate
Domestic expenses can be accurately calculated by the sum of various expenses, or a fixed rate (such as 5%) can be roughly formulated for fuzzy calculation, that is, domestic expenses = procurement cost x fixed rate.
2. FOB price calculation
FOB price calculation formula is as follows:
FOB price = (total domestic cost + profit) / bank exchange rate
If profit margin is used for calculation, pay attention to the setting of profit margin. Some companies set profit = cost price x profit margin, and some companies set profit = sales price x profit margin, which leads to slightly different calculation formulas.
3. Other trade terms price calculation
Other trade terms quotations can be converted on the basis of FOB price, the formula is as follows:
CFR price = FOB price + international freight
CIF price = CFR price / [1- (1 + insurance premium rate) x insurance premium rate] = CIF / CIP price x (1 + insurance premium rate) x insurance premium rate
According to international practice, the insurance premium rate is at least 10%, usually set at 10%, and if it exceeds 10%, the insurance company’s consent must be obtained in advance.