Incoterms
Incoterms are standard three-letter trade rules (EXW, FOB, CIF, DAP, DDP…) that define who pays for and who is at risk for goods at each stage of shipping.
Last reviewed 16 July 2026.
Incoterms (International Commercial Terms) are a set of standardised rules published by the International Chamber of Commerce that define the responsibilities of buyer and seller in an international sale. Each three-letter code — EXW, FOB, CIF, DAP, DDP and the rest — draws the line for who arranges and pays for transport, who carries the risk of loss or damage at each point, and who handles export and import formalities.
The current edition is Incoterms 2020. The term you agree with your supplier is written on the invoice and the contract, and it directly shapes what your quoted price does and does not include. Under EXW you take on almost everything from the factory gate; under DDP the seller delivers duty-paid to your door.
Choosing the right Incoterm is a commercial and cost decision, not just a logistics one. A lower headline price on EXW terms can end up more expensive than a higher CIF price once you add the freight, insurance and clearance you now have to arrange yourself.
How it affects your landed cost
The Incoterm sets the starting point for landed cost: it tells you which costs are already baked into the supplier's price and which you still have to add. To compare two quotes on different terms fairly, you have to normalise them to the same delivered basis — which is exactly the calculation our tool automates before it layers on UK duty and VAT.
Calculate your landed costIncoterms — FAQ
Related terms
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