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FOB literally means 'Free on Board'. So "FOB Shipping Point" means that if you buy something and pick it up yourself at the seller's shipping point, then there is no shipping cost to you.

Alternatively, the common "FOB Destination" means that there is no shipping cost to get the purchased item to the destination agreed on in the contract.

Example: Purchaser of a new International Harvester corn combine. Lets say a deluxe model for $600,000 dollars FOB destination. That means you pay Case/IH 600,000 bucks and they deliver a pristine new harvester to your farm with no shipping cost to you. Normally, shipping a huge piece of machinery like this across the country from their factory to your farm would be many thousands of dollars.

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