How to use the landed cost calculator
- List each product in the shipment with its product cost (the total paid to the supplier) and units.
- Enter the freight, insurance and any other fees for the whole shipment.
- Enter the duty rate from your own paperwork and choose whether duty is charged on the product cost alone or on cost plus freight and insurance.
- If you have several products, choose whether shared costs are split by product cost or by units. Read the landed cost per unit.
Formula
Landed cost = product cost + freight + insurance + other fees + duty
Duty = duty rate x dutiable base (product cost, or product cost + its freight and insurance)
Landed cost per unit = landed cost / units
Shared cost for a product = total shared cost x (product's share of cost or units)
Shared costs are divided in whole cents using the largest fractional cent method, so the products add up to the shipment totals.
1,000 units with freight, duty and insurance
A shipment of 1,000 units costs $10,000. Freight is $800, insurance is $100 and duty is 5% of the product cost, which is $500. The landed cost is $10,000 + $800 + $100 + $500 = $11,400, or $11.40 per unit. Costs added on top are 14% of the product cost.
With two products, A at $6,000 for 100 units and B at $4,000 for 300 units, and $1,000 of freight, $100 of insurance and $50 of other fees, sharing by product cost gives A $690 and B $460. With duty on cost plus freight and insurance at 5%, A's duty is $333 and B's is $222. Landed cost is $7,023 for A ($70.23 a unit) and $4,682 for B ($15.61 a unit).
Why landed cost matters
The invoice price from a supplier is only part of what a product costs once it reaches your door. Freight, insurance, duties and handling fees add to it, and if you price your products from the invoice alone, your margin can disappear. Landed cost per unit is the number to carry into pricing.
Shared costs such as freight cover the whole shipment, so with several products you need a way to divide them. Splitting by product cost gives pricier items a larger share, and splitting by units gives each item an equal share. Neither is a rule, so pick the one that matches how your costs arise.
Duty and customs are not simple
Customs rules decide what value duty is charged on, what rate applies to a product and which fees are added. Some systems charge duty on cost plus freight and insurance and others on the product value alone, which is why the tool lets you choose. Always use the rates and values on your own customs paperwork.
The calculator leaves out taxes, currency conversion, storage, returns and payment fees. To price a product from its landed cost, try the cost plus pricing calculator, and check margins with the profit margin calculator. Volume and weight charges are covered by the dimensional weight calculator and the CBM calculator.
Assumptions and limits
- Freight, insurance and other fees are whole-shipment totals, and duty is a single percent for all products.
- The duty rate is an input you take from your paperwork, not a figure this page supplies.
- Costs are in one currency, with no exchange rate or tax included.
- Units are whole numbers, and shared costs are divided by the method you choose.
Frequently asked questions
How do you calculate landed cost per unit?
Add the product cost, freight, insurance, other fees and duty, then divide by the number of units. For $11,400 of total cost and 1,000 units, the landed cost is $11.40 per unit.
What is the difference between product cost and landed cost?
Product cost is what you pay the supplier. Landed cost adds everything it takes to get the goods to your door, such as shipping, insurance, duty and handling fees.
Should duty be charged on cost or on cost plus freight?
That depends on the customs rules for your goods and country. The tool lets you choose either, so use the one that matches your paperwork.
How are freight and fees split across several products?
By product cost or by units, as you choose. The split is done in whole cents so the products add up exactly to the shipment totals.