What does F.O.B. mean?

[Gange]

Hi,
I'm about to start up a little business selling sax related stuff and need some translation help... :-)

One company I've been in contact with gave me their price list and then added "Our prices are F.O.B." and then the city and state. What does that mean?

[Gange]

Perhaps I should add that the company I contacted is located in the USA.

[Mike Ruhl]

The FOB Point is the location where legal title transfers on items shipped between the shipping and receiving parties. Most manufacturers ship FOB factory which means the purchaser owns the equipment once it leaves the shipper's facility. Loss or damage in shipping is legally the responsibility of the party having title, which on FOB factory shipments is the purchaser. Most manufacturers will assist in filing freight claims for damage, however it remains the purchaser’s responsibility to do such filing and the terms of the original invoice still apply.

[Mike_K]

FOB stands for "Free On Board". This means that the supplier pays shipping costs from the place of manufacture to a specified destination, at which point the responsibility passes over to the buyer.

So in your case, the prices include shipping to the stated city and state - but shipping somewhere else would be extra.

Actually, chances are the stated city and state is where the seller is located, so what they are saying is that there is an extra charge for delivery.

[Gange]

Thanks a lot, Mike!

So, I pay shipping, I take the risk of loss as soon the goods left the seller's warehouse.

In practise: I pay the company for the goods and for the shipping, and they bring it to the shipping company. Arriving at the shipping company they have fulfilled their part of the deal.

Am I correct?

[Mike Ruhl]

Thanks a lot, Mike!

So, I pay shipping, I take the risk of loss as soon the goods left the seller's warehouse.

In practise: I pay the company for the goods and for the shipping, and they bring it to the shipping company. Arriving at the shipping company they have fulfilled their part of the deal.

Am I correct?That's it. And that's why they brought it up - to make sure you understand where their responsibility ends.

[Gange]

Better safe than sorry...

Great, thanks both of you, Mike(s) :-)

[1saxman]

It basically means the price is for the item on their loading dock, and you come and get it. This is very unusual for portable instruments like saxes. You would normally expect this for a piano, for example. FOB implies that the seller wants nothing to do with dealing with a shipper, packing for shipping or anything else. You buy it, you pick it up or send someone for it. I'm getting ready to list an antique car on ebay for a friend, and it will be listed as FOB, (city and state). This lets the potential bidder know that it's up to him to arrange for transportation for the car from that location.

[Bflat]

I believe that originally F.O.B. was short for "freight on board" - the definition is as per the helpful replies from the two Mikes and 1saxman - "after it's loaded & shipped, you're on your own, pal."

Good luck with the biz Gange.

Bflat

[1saxman]

'freight on board' is exactly right.

[Mike_K]

'freight on board' is exactly right.
Not exactly right:

http://www.investopedia.com/terms/f/fob.asp

Also:
"FOB stands for "free on board"; it is used in business to indicate who is responsible for paying transportation charges: FOB destination, seller pays the freight; FOB shipping point, buyer pays the freight."
Fundamentals of Financial Accounting, Fourth Edition - Welsch, Anthony & Short.