What is landed cost and how do you calculate it?
The price a supplier quotes is not the price you pay. Landed cost is the total after freight, insurance, duty, taxes and handling fees arrive at your door.
The formula
Every importer should know this number before placing an order. It decides whether a product can be sold at a margin, whether a container is worth filling, and which supplier quote is actually cheapest.
What each part means
| Component | What it covers |
|---|---|
| Goods | The supplier's invoice value, usually converted to your currency. |
| Freight | The cost of moving goods from the Chinese port or warehouse to your destination. |
| Insurance | Coverage for loss or damage in transit, often around 1% of goods value. |
| Duty | The import tariff applied by your country, based on the product's HS code. |
| Taxes | VAT, GST or sales tax applied on import, depending on your destination. |
| Handling fees | Customs clearance, port handling, document fees and local delivery. |
Worked example
Suppose you are importing apparel from China to the United States:
| Item | Amount (USD) |
|---|---|
| Supplier quote | 1,200.00 |
| Sea freight LCL, 60 kg | 156.00 |
| Insurance (1%) | 12.00 |
| Duty (illustrative rate) | 112.10 |
| VAT/GST | 0.00 |
| Handling and clearance | 25.00 |
| Total landed cost | 1,505.10 |
In this example the supplier quote is only 80% of the real cost. That gap is exactly what the landed cost calculator shows in seconds.
Common mistakes
- Comparing supplier quotes without converting freight, duty and taxes.
- Using the wrong HS code, which changes the duty rate.
- Forgetting that VAT or GST applies on top of duty in most countries.
- Ignoring currency conversion and payment fees.
- Assuming a full container is cheaper per unit before checking fill rate.
Frequently asked questions
Do I need to know my HS code?
Not to get a first estimate. Start with the product category, then refine with the HS code once the supplier provides it or you confirm it with customs.
Why is the duty rate different by country?
Every customs authority publishes its own tariff schedule. The same product can be taxed differently in the US, UK, EU or Australia, and rates change over time.
Is the calculator a final customs quote?
No. It is a planning estimate. Customs decides the final classification and charges when the shipment clears.
Can I compare two supplier quotes?
Yes. Save each quote in the calculator, then select up to four saved quotes to compare side by side.
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