Reading a factory quote without getting burned
A first quote from an Indian factory is rarely a lie and rarely the whole truth. Most disputes come from two parties reading the same number to mean different things.
The unit price is not the landed cost
An ex-works unit price excludes domestic transport to the port, export clearance, freight, insurance, destination clearance and duty. Depending on the product, landed cost can be 30% to 80% above the quoted unit price.
Ask for the price against a stated incoterm every time. "Four dollars" means nothing; "four dollars FOB Chennai" means something.
MOQ is negotiable, but not free
Minimum order quantity usually reflects a setup cost — a dye lot, a mould, a print plate, a machine changeover. A factory can often go below MOQ if you pay the setup separately.
That is frequently the right trade for a first order. Paying $400 in tooling to order 300 units instead of 1,000 is cheaper than holding 700 units of something that has not sold yet.
Ask what the MOQ is protecting. If it is a setup cost, it has a price. If it is a material minimum, it usually does not.
Sample price tells you almost nothing
Samples are made by hand, by a supervisor, on a bench. Production is made at speed by a line. A perfect sample is necessary but not sufficient evidence.
Ask for a pre-production sample from the actual production line and materials, not a showroom piece. The gap between the two is where quality disputes live.
Payment terms are the real negotiation
A 30% deposit with 70% against the bill of lading copy is the common structure and a reasonable one. It leaves both sides exposed and both sides motivated.
Be wary of 100% in advance from a supplier you have not audited, and be realistic that no established factory will start work on open credit for a new buyer.
What an audit actually buys you
Confirmation that the factory exists, that it owns the machines it claims, that the line capacity matches the promise, and that the compliance certificates on the quote are current rather than expired.
It does not guarantee quality. It removes the most expensive category of failure: the supplier who was never going to be able to make your order at all.
In short
- Always quote against a stated incoterm.
- MOQ usually protects a setup cost, which can be paid separately.
- Insist on a pre-production sample from the real line.
- 30/70 against the B/L copy is the sane default.
Put this to use
A free Indian address takes under a minute and costs nothing until something ships.