CIF and FOB price calculation: EXW to DDP From EXW to DDP, one cost at each stop.
Converting a price between Incoterms rules means adding, in order, the cost items the seller takes on under each rule: loading and export clearance for FCA, pre-carriage to the port and origin terminal charges for FOB, the main freight for CFR, the insurance premium for CIF, destination terminal charges and on-carriage for DAP, import duties and taxes for DDP. Under Incoterms® 2020, CIF insurance must cover at least 110% of the contract price; because the premium is part of that price, the correct formula is CIF = CFR ÷ (1 − 1.1 × premium rate). Import duty, whatever rule the sale uses, is charged in Türkiye and the EU on a CIF-like value that includes freight and insurance up to the point of entry; the import VAT base adds the duties on top of that value.
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Enter your own cost items and the premium rate your insurer quoted; the tool invents no rates or amounts and only adds up the figures you enter, in the order this page describes. An empty field counts as zero.
Which cost each rule adds
In Incoterms® 2020 each rule lists in one place, its A9 article, where the seller's costs end. Line the rules up from EXW to DDP and each step adds one or two items to the seller's price; converting a price is nothing more than adding or removing those items. Who pays each of twelve cost items under all eleven rules is in the Incoterms cost allocation table; this page shows only the order in which the price grows.
| Rule | Added to the previous price | ICC basis |
|---|---|---|
| EXW | Starting point: goods at the seller's premises, not loaded; export clearance with the buyer | EXW A2, B9 |
| FCA (seller's premises) | Loading onto the buyer's vehicle and export clearance | FCA A2, A7, A9 |
| FOB | Pre-carriage to the port and origin terminal charges, including loading on board (delivery is on board, FOB A2) | FOB A2, A9 |
| CFR | Main freight to the port of destination | CFR A4, A9 |
| CIF | Insurance premium, on at least 110% of the contract price | CIF A5, A9 |
| DAP | Destination terminal charges and on-carriage to the named place | DAP A9 |
| DDP | Import clearance, import duties and taxes | DDP A9 |
Under FCA, if the place of delivery is a terminal rather than the seller's premises, pre-carriage also goes into the FCA price and the seller delivers on its own vehicle, ready for unloading (FCA A2). CPT and CIP are the container counterparts of CFR and CIF: CPT carries the same items, and CIP uses the same insurance formula, but its minimum cover is Clauses (A).
Three items depend on the contract, not the rule. Unloading at the port of discharge is the seller's cost under CFR and CIF only if it was for the seller's account under the contract of carriage (CFR A9, CIF A9); under DAP, unloading at the place of destination follows the same condition. The main freight is billed per container for full loads and on chargeable weight (CBM, LDM, volumetric weight) for groupage.
Both ends of the chain need separate care on exports from Türkiye. Under EXW a foreign buyer cannot file the export declaration; what that means in practice is on EXW exports from Türkiye. Under DDP the seller takes on import duty and the declaration; the conditions for selling DDP into the EU are on DDP sales to the EU.
FOB, CFR and CIF are for sea and inland waterway transport only. For containers the same chain is built with FCA, CPT and CIP; the reason is on FOB or FCA, and the air and road counterparts on Incoterms by transport mode.
CIF and CIP insurance: 110% and the formula
Under article A5 of the Incoterms® 2020 CIF rule, unless otherwise agreed or customary in the particular trade, the seller obtains cargo insurance complying with Institute Cargo Clauses (C). The cover is at least the contract price plus 10%, that is 110%, is in the currency of the contract and covers the goods from the point of delivery to at least the named port of destination. CIP A5 carries the same 110% rule; the difference is the clauses: under CIP the minimum cover is Clauses (A). The ICC's introduction notes that moving to (A) could also mean an extra premium cost. What the clauses cover and what they leave out: cargo insurance and the ICC clauses.
The logic of the formula is this. The CIF price is the CFR price plus the premium. The premium is charged on the sum insured, and the sum insured is 1.1 times the CIF price. With r as the premium rate:
Premium = r × 1.1 × CIF and CIF = CFR + Premium
Substituting the first into the second gives CIF × (1 − 1.1 × r) = CFR, so CIF = CFR ÷ (1 − 1.1 × r).
The same formula works for CIP: CIP = CPT ÷ (1 − 1.1 × r). Going back: CFR = CIF × (1 − 1.1 × r).
In words: the premium is also charged on itself, because the sum insured depends on the CIF price, which contains the premium. Multiplying CFR by the premium rate and adding the result therefore finds a slightly smaller premium. At low rates the gap is small, and it grows with the rate. The formula assumes the insurer charges the premium on the sum insured; if your policy uses another base, build the calculation on that base.
Worked example
The figures below are round example values chosen only to show the order of the calculation. None of them is a market price, a premium rate or an Edolines quote.
| Rule | Calculation | Price (USD) |
|---|---|---|
| EXW | Example starting price | 10,000 |
| FCA | 10,000 + 50 loading + 150 export clearance | 10,200 |
| FOB | 10,200 + 400 pre-carriage + 250 origin terminal charges | 10,850 |
| CFR | 10,850 + 1,800 main freight | 12,650 |
| CIF | 12,650 ÷ (1 − 1.1 × 0.005) = 12,650 ÷ 0.9945; premium ≈ 70 | ≈ 12,720 |
| DAP | 12,720 + 300 destination terminal charges + 500 on-carriage | ≈ 13,520 |
| DDP | 13,520 + 1,500 import duties and taxes (example amount) | ≈ 15,020 |
The example premium rate is 0.5%. The formula gives CIF as 12,719.96 USD; the sum insured is 1.1 times that, about 13,992 USD. The shortcut (12,650 × 1.0055) gives 12,719.58 USD; at this rate the gap is 0.38 USD. The premium stays in the DAP and DDP rows because under these rules the seller carries the risk up to destination and is the one who insures; that is not a contractual duty but the seller's own protection. Amounts are rounded to whole dollars.
Because the example is a container load, a real contract would say FCA, CPT and CIP instead of FOB, CFR and CIF; the order of the figures does not change. Which delivery-term code goes on the declaration and how it appears on the e-invoice is a separate question: Incoterms on the declaration and e-invoice.
Why customs value looks like CIF
Whatever rule the sale uses, the import duty base is cut at the same point. In Türkiye the customs value of imported goods is the transaction price, adjusted under articles 27 and 28 (Turkish Customs Law No. 4458 art. 24/1). The Law adds to that price the transport and insurance costs up to the port or place of entry into Türkiye and the loading and handling charges tied to that transport (art. 27/1-e). Transport and insurance after arrival at the place of entry stay out of the value, provided they can be distinguished from the price (art. 28/a).
The EU rule is built the same way. Under the Union Customs Code the primary basis of customs value is the transaction value (Regulation (EU) No 952/2013 art. 70(1)); the cost of transport and insurance and the associated loading and handling charges up to the place where the goods are brought into the customs territory of the Union are added to the price (art. 71(1)(e)), and transport after entry is not (art. 72(a)).
The result: on goods bought EXW or FOB the importer adds freight and insurance to the value; on goods bought DAP or DDP the transport after the place of entry can be separated out and deducted. That is why the value is "CIF-like" and not the CIF price itself: the place of entry can differ from the port of destination, and the law lists other additions too, such as commissions, packing and royalties. How the place of entry is defined by mode in Türkiye is in the "When it goes wrong" section of the cost allocation table, and the order of the taxes on import duty calculation in Türkiye. In any other country, confirm the rule in that country's legislation.
Always build the price in the same direction: start from EXW and, for each rule, add only the item that passes to the seller. List in the quote, item by item, what is included.
Under CIF and CIP, find the premium with the formula, not on CFR or CPT, and check that the policy covers at least 110% of the contract price, in the currency of the contract.
If you quote DDP, calculate import duty on the CIF-like value and import VAT on that value plus the duties, not on the DDP amount on the invoice.
When it goes wrong
The policy is written for the invoice amount
If the sum insured on a CIF or CIP sale equals the invoice amount, the cover falls below the minimum A5 requires: the rule asks for at least 110% of the contract price. Unless the parties agreed another amount, the seller has breached the rule, and after a loss the argument about the missing cover comes back to the seller.
The insurance is arranged in another currency
If the contract is in euros and the policy in Turkish lira, a change in the exchange rate can push the cover below 110% of the contract price. A5 requires the insurance to be in the currency of the contract.
On an EXW or FOB purchase the value is declared at the invoice amount
Freight and insurance up to the place of entry belong in the value (Law No. 4458 art. 27/1-e). Leave them out and too little duty is paid, and the difference can be claimed later. Ask your customs broker about the consequences of a valuation difference.
A DDP price is quoted without estimating import duty
Under DDP the taxes are in the seller's price: import duty is calculated on the CIF-like value, import VAT on that value plus the duties. The rate depends on the HS code and the country of origin; before quoting, confirm it in the destination country's tariff.
Frequently asked
How do I calculate a CIF price from FOB?
First add the main freight to the port of destination to the FOB price to get CFR. Then divide CFR by (1 − 1.1 × premium rate). At a premium rate of 0.5% the divisor is 0.9945. Get the premium rate from your insurer or broker.
How do I go back from a CIF price to FOB?
Multiply CIF by (1 − 1.1 × premium rate) to get CFR; subtract the main freight from CFR and FOB remains. For that you need the freight amount and the rate at which the premium was calculated.
How big is the difference between an EXW and a FOB price?
There is no fixed percentage. The difference is the sum of loading, export clearance, pre-carriage to the port and origin terminal charges, including loading on board. These items vary with the factory's distance from the port, the type of cargo and the terminal; each should appear separately in a quote.
Is customs duty calculated on FOB or on CIF?
In Türkiye and the EU, on a value that includes freight and insurance up to the place of entry, a CIF-like amount (Law No. 4458 art. 27/1-e; Regulation (EU) No 952/2013 art. 71(1)(e)). A FOB sale does not change that; the importer adds freight and insurance to the value.
Why is CIF insurance 110%?
Incoterms® 2020 itself says so: under CIF A5 and CIP A5 the cover is at least the contract price plus 10%. The parties can agree another amount in the contract; if they do, write the amount into it explicitly.
Sources
- ICC — Incoterms® 2020 (Publication No. 723E), rules for sea and inland waterway transport FOB A2 and A9; CFR A4 and A9 (freight; unloading at the port of discharge only if for the seller's account under the contract of carriage); CIF A5 (Clauses (C), at least the contract price plus 10%, i.e. 110%, currency of the contract, from the point of delivery to the port of destination) and A9 · library.iccwbo.org (ICC Digital Library) · accessed 24 Oct 2026
- ICC — Incoterms® 2020 (Publication No. 723E), rules for any mode or modes of transport EXW A2 and B9 (delivery not loaded, export clearance with the buyer); FCA A2, A7 and A9; CIP A5 (Clauses (A), 110%); DAP A9 and B7; DDP A9 (import duties and clearance with the seller) · library.iccwbo.org (ICC Digital Library) · accessed 24 Oct 2026
- ICC — Incoterms® 2020 Checklist and Flowcharts The seller's insurance obligation under CIF is limited to minimum cover, LMA/IUA Clauses (C); "all risks" (A) under CIP · ICC Publication No. 817E · library.iccwbo.org (PDF, free) · accessed 24 Oct 2026
- ICC — Incoterms® 2020 Introduction (Publication No. 723E) Paragraph 70: the reasoning for (C) under CIF and (A) under CIP, and the possible extra premium cost of (A). The introduction is signed by Charles Debattista; by its own note the views are the author's and not part of the rules · icc-switzerland.ch · accessed 24 Oct 2026
- Turkish Customs Law No. 4458 art. 24/1 (transaction price, adjusted under articles 27 and 28), art. 27/1-e (transport, insurance, loading and handling up to the port or place of entry), art. 27/3 (no other additions), art. 28/a (transport and insurance after the place of entry) · mevzuat.gov.tr (PDF, Turkish) · accessed 24 Oct 2026
- Regulation (EU) No 952/2013, Union Customs Code art. 70(1) (transaction value), art. 71(1)(e) (transport, insurance, loading and handling up to the place where the goods are brought into the customs territory of the Union), art. 72(a) (transport after entry); text read from Official Journal L 269 of 10 October 2013 · eur-lex.europa.eu · accessed 24 Oct 2026
This page is for information only and is not legal, tax or customs advice. The example figures only show the order of the calculation; real prices, premiums and duties are calculated with your own quotes, your policy and the destination country's tariff. Ask your insurer or broker about the sum insured and the clauses, and your customs broker about value and duty. Incoterms® is a registered trademark of the ICC.
Change log
- Page published as the English counterpart of the Turkish page of 24 Oct 2026. Basis: ICC Incoterms® 2020 (CIF and CIP A5, A9), Turkish Customs Law No. 4458 art. 24, 27, 28 and Regulation (EU) No 952/2013 art. 70–72; all texts read directly.