What is landed cost?
Landed cost is the total cost of getting one product from your supplier to your warehouse, shop or front door. It is the number you should price from. If you set your wholesale or retail price from the supplier's invoice alone, every unit you sell quietly loses the freight, duty and fees you paid to bring it in.
The landed cost formula
| Cost | What to include |
|---|---|
| Product value | Supplier price per unit × units in the shipment |
| Freight | Sea, air or courier charges to your country |
| Insurance | Cargo insurance for the shipment |
| Customs duty | Duty rate × the value customs charges duty on |
| Other fees | Customs broker, port or airport handling, delivery to your door |
Landed cost per unit = (product value + freight + insurance + duty + other fees) ÷ units
Example: you import 500 candles at $4.00 each. Freight is $450, insurance $30, duty 6.5% on the product value, and the broker and delivery fees come to $150. Duty = $2,000 × 6.5% = $130. Total = $2,000 + $450 + $30 + $130 + $150 = $2,760, or $5.52 per candle, 38% above the supplier price.
Product value or CIF: what is duty charged on?
Countries calculate duty on different bases, and it changes the result:
- Product value (FOB): the United States, Canada and Australia generally charge duty on the value of the goods without the international freight and insurance.
- CIF (cost, insurance and freight): the European Union, the United Kingdom and India generally charge duty on the goods plus the freight and insurance to the border, so freight itself attracts duty.
Use the switch in the calculator to match your country. Your customs broker or your country's customs website will confirm the basis and the exact rate for your product's tariff code.
What about import VAT or GST?
Many countries also charge VAT or GST on imports. If your business is registered for VAT or GST, you can usually reclaim it, so it is a cash-flow cost rather than part of your landed cost, and the calculator leaves it out. If you are not registered and cannot reclaim it, add it to other fees.
Ways to lower your landed cost
- Ship more units per order. Freight and broker fees are mostly fixed per shipment, so a larger order spreads them across more units.
- Check the tariff code. A product can fall under more than one code, and the duty rates can differ. Ask a broker before you commit to a large order.
- Compare sea and air. Air freight is faster but often several times the cost per unit for heavy or bulky goods.
- Ask about trade agreements. Goods made in some countries qualify for reduced or zero duty with the right certificate of origin.
From landed cost to your prices
Once you know your landed cost per unit, use it as the cost in the wholesale price calculator to set wholesale and retail prices, or check your profit with the margin calculator. Our guide to pricing products for wholesale explains how to choose the margins.
When your prices are ready, put them in a price list your buyers can download or open as a link.