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How to Calculate Landed Cost: A Complete Guide for Importers

If you import products to resell, the price on the factory invoice is not your real cost. By the time a shipment reaches your warehouse it has picked up freight, duty, taxes, and a handful of fees that are easy to forget. Add them up and divide by your units and you get your landed cost, the number you should actually be pricing from. Get it wrong and you can sell a whole shipment at what looks like a healthy margin while quietly losing money on every unit.

This guide walks through exactly what landed cost includes, the formula to calculate it, a worked example, and the mistakes that catch importers out.

What is landed cost?

Landed cost is the total cost of getting a product from your supplier to your door, expressed per unit. It goes well beyond the product price. A complete landed cost includes:

• Product cost (the factory price, converted to your working currency)
• International freight (sea or air)
• Insurance on the shipment
• Customs duty or tariff, based on the product's HS code
• Import tax or GST
• Customs brokerage fees
• Port and handling charges
• Packaging and any per-unit finishing costs

Knowing this number per unit is the only honest basis for setting your wholesale and retail prices. Everything else is guessing.

The landed cost formula

Work it out for the whole shipment, then divide by the number of units. Step by step:

1. Convert the total product cost to your working currency using your actual exchange rate.
2. Add freight and insurance to get your customs value.
3. Apply your duty percentage to that customs value.
4. Add import tax or GST on the running subtotal.
5. Add brokerage, port and handling, and packaging.
6. Divide the grand total by your unit quantity.

The result is your landed cost per unit. The order matters: duty is charged on the goods plus freight and insurance, and GST is usually charged on the value including duty, so applying them in the wrong order gives you the wrong number.

A worked example

Say you are importing 500 units of an apparel item from China, priced at USD 12.50 each, and your working currency is AUD at an exchange rate of 1.53.

• Product cost: 500 x 12.50 = USD 6,250, or about AUD 9,563
• Freight and insurance: AUD 600 + AUD 250 = AUD 850
• Customs value: 9,563 + 850 = AUD 10,413
• Duty at 5%: AUD 521
• GST at 10% on (customs value + duty): about AUD 1,093
• Brokerage and port handling: AUD 400
• Packaging at AUD 0.50 per unit: AUD 250

Total shipment cost is roughly AUD 13,127. Divided by 500 units, that is a landed cost of about AUD 26.25 per unit, more than double the USD 12.50 factory price. Price off the factory price and you would badly underprice this product.

Common mistakes that eat your margin

• Forgetting duty or GST entirely, then wondering why the bank balance does not match the spreadsheet.
• Using an outdated or optimistic exchange rate instead of the rate you actually paid.
• Spreading a per-shipment cost like freight across the wrong unit count.
• Ignoring brokerage and port handling, which hit smaller orders hardest on a per-unit basis.
• Treating landed cost as a one-time calculation, when currency and freight rates move between every order.

Why landed cost drives everything else

Your landed cost sets the floor for your pricing. From it you build your wholesale price, your recommended retail price, and the margin you keep at each step. If the landed cost is wrong, every price above it is wrong too. It also tells you how much working capital a shipment ties up, which matters as much as margin when you are self-funding your orders.

Skip the manual math. Our free landed cost calculator does every step above, with live currency conversion, in a few seconds. Open the free calculator

The bottom line

Landed cost is not complicated, but it is unforgiving. Add up every cost between the factory and your door, divide by your units, and price from that number, not the invoice. Do it for every order, because the inputs change each time. Once you are pricing from your true cost, the rest of your numbers finally start telling the truth.

Related guides

• How to Calculate CBM and Choose the Right Container
• Markup vs Margin: How to Price Imported Products
• Wholesale Pricing for Importers: Setting Your Price Tiers From Landed Cost

Landed Cost Calculator is free and needs no account.