Landed Cost

Landed cost is the complete cost of getting a product from the seller to the buyer, including every expense incurred along the way. For international shipments, this goes far beyond just the product price and shipping charges.

Components of Landed Cost

Product Costs:

• Purchase price
• Manufacturing costs
• Packaging

Transportation Costs:

• Freight charges
• Fuel surcharges
• Handling fees
• Insurance

Import Costs:

• Customs duties
• Import taxes (VAT, GST)
• Brokerage fees
• Customs examination fees

Other Costs:

• Currency conversion fees
• Port handling
• Warehouse storage
• Last-mile delivery

Landed Cost Formula

Landed Cost = Product Price + Shipping + Duties + Taxes + Fees

Example Calculation

Importing a $500 product from China to the US:

The landed cost is 32% higher than the product price alone.

Why Landed Cost Matters

For Buyers:

• Accurate budget planning
• True cost comparison between suppliers
• Avoid surprise charges
• Better margin calculations

For Sellers:

• Accurate DDP pricing
• Competitive international quotes
• Transparent customer expectations

Common Mistakes

1. Forgetting duties - Import duties can add 0-25%+
2. Ignoring taxes - VAT/GST applies in most countries
3. Underestimating brokerage - Customs clearance isn’t free
4. Missing currency fees - Banks charge 2-3% on conversion
5. Overlooking insurance - Required for high-value goods

How to Calculate Landed Cost

1. Identify HS code - Determines duty rates
2. Research duty rates - Check destination country tariffs
3. Calculate taxes - VAT/GST on (product + shipping + duties)
4. Add all fees - Broker, handling, delivery
5. Include buffer - Add 5-10% for unexpected costs

Tools for Landed Cost

• Duty calculators (SimplyDuty, Avalara)
• Carrier landed cost estimators
• ERP systems with trade compliance
• Customs broker quotes