Reviewed November 2026. Formulas are shown above the guide. Report an error or request a calculator.
What landed cost means
Landed cost is the total amount you pay to get one unit of a product from the supplier's factory onto your own shop floor. The supplier's invoice price is only the first line. Freight, cargo insurance, import duty, customs brokerage, port charges and the truck from the port all add to it, and for low-value or bulky parts they can add 20–40% on top of the purchase price.
If you quote your own selling price from the supplier price alone, every one of those costs comes straight out of your margin. Landed cost is the number that belongs in your bill of materials and your pricing sheet.
Worked example
The default values above describe a typical small shipment: 5,000 parts at $4.20 each on FOB terms, sea freight of $1,850, insurance at 0.5% of the goods value, a 6.5% duty rate, $320 of broker and customs fees and $410 of port and inland handling.
| Step | Amount |
|---|---|
| Goods (5,000 × $4.20) | $21,000.00 |
| Freight | $1,850.00 |
| Insurance (0.5% of goods) | $105.00 |
| Duty base, CIF | $22,955.00 |
| Duty (6.5%) | $1,492.08 |
| Fees + handling | $730.00 |
| Landed cost | $25,177.08 |
That is about $5.04 per unit, roughly 20% more than the $4.20 on the invoice. Switch the duty basis to FOB and the duty falls to $1,365, because freight and insurance are no longer taxed.
CIF or FOB: which duty basis applies
Countries disagree on what the duty is charged on. The European Union, the United Kingdom, South Korea, China, Japan, Australia and most other countries charge duty on the CIF value: the goods plus the cost of insurance and freight to the border. The United States and Canada charge duty on the FOB value, so international freight and insurance stay out of the duty base.
The difference grows with freight cost. Heavy, cheap items shipped by air can carry freight equal to half their value, and on a CIF basis you pay duty on that freight too.
Common mistakes
- Using the wrong duty rate. The rate depends on the HS code and the country of origin. Free-trade agreements can cut it to zero, but only with a valid certificate of origin.
- Forgetting fixed fees on small shipments. A $300 broker fee is 1% of a $30,000 container but 15% of a $2,000 air parcel.
- Ignoring VAT or GST. Import VAT is usually recoverable for registered businesses, so this calculator leaves it out. If you cannot reclaim it, add it to the other costs.
- Spreading freight by unit count only. If one shipment mixes large and small parts, allocate freight by weight or volume instead.
Frequently asked questions
Does landed cost include VAT?
Usually not. Registered businesses can reclaim import VAT or GST, so it is a cash-flow item rather than a cost. If your business cannot reclaim it, add it to the handling field.
Where do I find the duty rate?
Look up your product's HS code in the destination country's tariff schedule, for example the US HTS, the EU TARIC database or your national customs portal. Your customs broker can confirm it.
What is the difference between FOB and CIF?
FOB is the value of the goods loaded on the ship at the origin port. CIF adds the cost of insurance and freight to the destination. Most countries charge duty on CIF; the US and Canada use FOB.
Should freight be split by quantity or by weight?
For a single product, by quantity is fine. For mixed shipments, split freight by weight or volume so heavy parts carry their real share.