Comparing an asking price against a buyer's target figure means placing the factory's own final costing sheet next to the price the buyer needs to pay, and naming exactly how big the gap between the two is. This lesson mainly teaches the decision flow of an order: what a buyer decides to do once it sees a quoted price it did not ask for. Without this comparison step, a negotiation has no starting point; both sides are simply repeating numbers at each other instead of knowing precisely what separates them. This page shows you the general rule for comparing the two figures, the shapes this comparison takes in real life, and one worked case, Sara at Northline Apparel checking Delta Garments' asking price for Order A.
You need: the assembled final costing sheet and its asking price from lesson 4.1. You do not need to know how to negotiate yet; this lesson only teaches how to compare the two figures correctly.
By the end of this lesson you can:
Not covered here: which cost components can flex to help close the gap (lesson 4.3), and how to present a price increase with evidence (lesson 4.4).
| Term | Meaning |
|---|---|
| FOB (free on board) | The factory delivers the goods on board the ship at its own port. Freight from there is the buyer's cost. |
| Selling price | The price a company charges for what it sells; profit plus cost before profit. |
| Cost before profit | Everything a company pays to make or buy a product, before its own profit is added. |
| Margin | Profit divided by the selling price, shown as a percentage. |
| Markup | Profit divided by the cost before profit, shown as a percentage. |
| Target figure | The figure a person aims for going into a negotiation, more favourable than the walk-away position. |
| Walk-away position | The least favourable figure a person will still accept before ending the negotiation without an agreement. |
| Negotiating position | The target figure, walk-away figure and concession options a person prepares before a negotiation, rather than deciding them during the call. |
A factory's asking price comes from its own final costing sheet: fabric, trims, making, overhead and profit, added up on its own side of the trade. A buyer's target figure comes from the other direction entirely: what the buyer's own selling price and margin need the landed cost to be, worked backward to a number it can afford to pay the factory. Neither figure is calculated from the other, so there is no reason to expect them to match on the first quote. The first useful step in any negotiation is simply naming the gap between the two, in dollars and as a percentage, before either side tries to move the other.
| What can differ | The shapes you will meet | Why it matters to you |
|---|---|---|
| Who calculates which figure | A factory calculates its own asking price bottom-up from its costing sheet. A buyer calculates its own target figure top-down from its shop price and required margin. | Understanding which direction each figure comes from explains why they rarely match by coincidence; they are answers to two different questions. |
| Export or domestic comparison | Northline Apparel compares Delta Garments' export FOB asking price against its own import landed-cost target. Cedar & Co., buying domestically, compares an ex-factory asking price against its own in-shop target instead. | The same comparison method applies, but the price labels and the costs added afterward (freight and duty for export, local delivery for domestic) differ. |
| A small gap or a large gap | A gap of a few cents per piece is often closed by a small concession on one side. A gap of tens of cents per piece usually means one side has a wrong assumption about the other's cost structure, and needs more than a single concession to close. | The size of the gap tells you what kind of conversation is needed next: a quick adjustment, or a fuller review of the costing sheet itself. |
| Make to Order or hybrid buying | A Make to Order buyer such as Northline Apparel sets its target figure before placing a single order. A brand running a hybrid production model may hold different target figures for its Make to Order export lines and its Make to Stock domestic lines, since each answers to a different selling price. | The comparison method never changes; only how many target figures a buyer is tracking at once changes with its own business model. |
Delta Garments quotes Northline Apparel an asking price of USD 3.20 per piece for Order A, assembled in lesson 4.1 from fabric, trims, making, overhead and profit. Sara, the buyer at Northline Apparel, holds her own target figure of USD 3.00 per piece for this style, an illustrative teaching number worked out from Northline's own shop price and required margin, not a fixed fact about Order A itself. Comparing the two gives a clear starting point before either side says anything else. Neither Sara nor Mona can see the other's own working, only the two final figures, which is exactly why naming the gap in plain numbers matters more than guessing at the other side's reasoning.
| Figure | USD per piece | Where it comes from |
|---|---|---|
| Delta Garments' asking price | 3.20 | Bottom-up from the assembled final costing sheet (lesson 4.1) |
| Northline's target figure (illustrative) | 3.00 | Top-down from Northline's own shop price and required margin |
| Price gap | 0.20 | Asking price minus target figure |
A common mistake is assuming that a buyer who has not stated a target figure has none, or is simply willing to accept the asking price as quoted. A buyer nearly always has a target figure in mind, calculated from its own shop price and required margin, even when it has not yet said the number out loud. Quoting a price and hearing no immediate objection is not the same as confirming there is no gap to close; it may simply mean the buyer has not yet finished its own comparison.
A factory works out its own asking price from its costing sheet: fabric, trims, making, overhead and profit added up. A buyer works out its own target figure from a different direction: what it needs to pay so its own shop price and margin still work. These two numbers rarely match by chance, because they answer different questions. The first useful thing either side can do is find the gap between them, in dollars and as a percentage, before trying to change anyone's mind. A buyer that has not said its target figure out loud almost always still has one in mind.
Sara, the buyer at Northline Apparel, receives Delta Garments' quotation of USD 3.20 per piece for Order A. She does not reply for three days. Mona, the merchandiser at Delta Garments, begins preparing the order for production, assuming the silence means the price is accepted.
Here is the note Mona wrote in her own order file:
Is Mona's assumption safe? Decide before opening the answer.
No, not safe. Two facts decide this.
First, silence is not the same as agreement. Sara's own target figure for this style, based on Northline's shop price and required margin, may sit below USD 3.20; she may simply still be reviewing the quote against her own numbers, not agreeing to it.
Second, booking production capacity before the price is confirmed carries a real cost if the buyer later pushes back. If Sara returns with a target figure of USD 3.00, Delta Garments has already committed capacity to an order whose price is not yet settled, weakening its own negotiating position rather than strengthening it.
Mona's safer step is to confirm receipt and ask directly whether USD 3.20 works against Northline's own target, rather than reading silence as acceptance.
If Delta Garments books production capacity for Order A assuming the USD 3.20 asking price is accepted, and Sara later returns with a target figure of USD 3.00, Delta Garments must now either accept a lower price after already committing resources, or delay a buyer it has already told production is under way.
Confirming the buyer's target figure before committing capacity, rather than reading silence as agreement, is what keeps Delta Garments negotiating from an equal footing instead of an already-committed one.
Add your factory's asking price from the Final costing sheet's total row, and your buyer's stated (or calculated) target figure, into the same working note. Subtract one from the other to find your own price gap in dollars, then divide that gap by the asking price for the percentage gap, exactly as this lesson calculated for Order A.
[Download the Final costing sheet](../../templates/T12-C04-final-costing-sheet.xlsx)
1. Why do a factory's asking price and a buyer's target figure rarely match on the first quote?
2. Delta Garments' asking price is USD 3.20 and Northline's illustrative target figure is USD 3.00. What is the price gap as a percentage of the asking price?
3. Order B, the jeans, has a fixed asking price of USD 9.80 per piece. If a buyer's illustrative target figure for Order B is USD 9.30, what is the price gap in dollars?
| EN | AR | FR | TR | Meaning |
|---|---|---|---|---|
| FOB (free on board) | تسليم على ظهر السفينة في ميناء المصنع | FOB (franco à bord) | FOB (gemide teslim) | The factory delivers the goods on board the ship at its own port. Freight from there is the buyer's cost. |
| Selling price | سعر البيع | Prix de vente | Satış fiyatı | The price a company charges for what it sells; profit plus cost before profit. |
| Cost before profit | التكلفة قبل الربح | Coût avant profit | Kârdan önceki maliyet | Everything a company pays to make or buy a product, before its own profit is added. |
| Margin | الهامش | Marge | Marj | Profit divided by the selling price, shown as a percentage. |
| Markup | الزيادة على التكلفة | Majoration (marge sur coût) | Kâr yüzdesi (markup) | Profit divided by the cost before profit, shown as a percentage. |
| Target figure | الرقم المستهدف | Chiffre cible | Hedef rakam | The figure a person aims for going into a negotiation, more favourable than the walk-away position. |
| Walk-away position | موقف الانسحاب | Position de repli | Çekilme pozisyonu | The least favourable figure a person will still accept before ending the negotiation without an agreement. |
| Negotiating position | موقف تفاوضي | Position de négociation | Müzakere pozisyonu | The target figure, walk-away figure and concession options a person prepares before a negotiation, rather than deciding them during the call. |
You can now compare an asking price against a buyer's target figure and name the gap between them. The next lesson looks inside the costing sheet itself to find which components can move to help close that gap without erasing the factory's own margin. Back to the course map