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Calculating True Landed Cost

Rebuild your margin on the full cost of getting a unit sellable — not the supplier's quote alone.

Why a quote is not a cost

A supplier quotes a unit price — what the product costs to leave their factory door, and nothing else. Between that door and a sellable unit sits freight, insurance, duty, clearance, and the cost of moving inventory into the fulfillment network. Landed cost is the sum of all of it, spread across the units that survive. Treat the quote as where the cost starts, not where it ends.

A price is not a cost
A unit price is what the product costs the supplier to hand you; landed cost is what it costs you to have it ready to sell.

Incoterms allocate cost and risk

A quote is meaningless until you know which Incoterm it sits under. Incoterms allocate cost and risk between buyer and seller at each stage, so one unit price under two terms describes two different landed costs.

EXW (Ex Works)

The seller covers only the goods at the factory; you carry everything from that door onward.

FOB (Free On Board)

The seller covers goods to the port and loaded; you carry freight, insurance, duty, clearance, and inbound.

DDP (Delivered Duty Paid)

The seller covers nearly everything to your door, but the cost is folded into the quote.

A low EXW price and a high DDP price can describe the same total, so compare quotes only when they rest on the same term. Ask for the term on every quote.

Choosing a freight mode

Freight mode is a tradeoff between speed, cost, and cash-flow. Faster modes free your capital sooner; slower modes tie money up in transit. Sea freight is usually cheapest per unit and slowest, which suits bulk restocks you planned ahead. Air costs far more per unit but compresses transit, and can be right when a stockout would cost more than the premium. Express is rarely economical for a full order; keep it for samples and urgent top-ups. Match the mode to the order, not the rate.

Duties, tariffs, and clearance

Landed cost is a stack, not a single add-on. On top of the goods and the freight sit the charges that carry a shipment across a border and into the place you sell from:

Duty

A percentage of declared value, set by the product's classification code and its destination market.

Tariffs

Additional charges some categories or origins carry on top of standard duty.

Import tax

Value-added or goods-and-services tax many markets collect at the border — count only what you cannot reclaim, since registered sellers usually recover it.

Customs clearance

Broker fees and the paperwork that release the shipment into the country.

Insurance

Cover for loss or damage in transit, priced against the shipment value.

Inbound freight

Moving the goods from the port to the fulfillment network that stores and ships them.

The classification code drives the duty rate, so confirm it before you model anything. Some charges are fixed per shipment and some scale with value, so per-unit landed cost falls as order size rises — small first orders carry the heaviest overhead.

Recompute the margin on landed cost

The landed cost you estimated in the profitability model was a placeholder — rebuild the margin now on real numbers. The free landed-cost calculator computes duty, tariffs, and tax per marketplace. Run the sum once, in order, before you commit to a price:

1

Sum the stack

Add goods, freight, insurance, duty, tariffs, tax, clearance, and inbound freight into one shipment total.

2

Divide by surviving units

Split that total across the units that arrive sellable, not the units you ordered — rejects raise the real per-unit cost.

3

Recompute margin

Subtract landed cost per unit and your selling fees from the price, then rerun the profitability model with advertising per unit and a stressed return rate. What survives is your real net margin.

Model it before you order

A margin that only works at the quoted unit price is a margin that does not work.

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