Ex-factory price refers to the price that a manufacturer charges for a distributor or other buyer to purchase products directly from the factory. Ex-factory price is the price of the goods only. Transportation costs, shipping, handling, or taxes will be excluded from the price, i.e. The mentioned costs are borne by the buyer.
Hence, when the Ex-factory price is used, the buyer is responsible for arranging the pickup of the goods from the factory. It is the exact amount of product the manufacturer charges to the distributor or to the dealers as a product price. Often distributors and wholesale companies purchase goods directly from the factory by providing their own transport.
If the buyer agrees with ex-factory terms, he would be liable to undertake all the shipping costs from the buyer’s place of business until it reaches his point of delivery. Under the guidance of the buyer, the entire work of the goods, loading from the seller’s warehouse will be completed. That means, the buyer will hire trucks, or any other transport to carry the goods and the buyer is solely responsible for that part and will bear transport costs. Here the buyer appoints a shipping and freight forwarding company to collect goods from the seller’s factory to the buyer’s place including insurance of goods. It is one of the 11 current Incoterms.