What Is Landed Cost?
Landed cost is the total cost of a product once it reaches your warehouse — every dollar you spend from the moment you place the factory order to the moment the goods are on your shelf. It's the number you need to know before you price a product, accept a PO, or place an order.
The factory price is typically 60–85% of your real landed cost. The remaining 15–40% is freight, duty, customs fees, port charges, and inland delivery. These costs don't show up on the invoice — they show up as surprise charges after your goods have already left the factory.
The Landed Cost Formula
Import Duty = CIF Value × Duty Rate (%)
VAT/GST = (CIF Value + Import Duty) × VAT Rate (%)
Total Landed Cost = CIF Value + Import Duty + VAT + Customs Fees + Last-Mile
Typical Landed Cost Breakdown
These are representative ranges for sea freight imports. Your actual numbers depend on product type, HS code, destination country, and shipment size.
| Cost Component | Typical Range |
|---|---|
| Product cost (FOB) | base value |
| International freight | 3–15% of FOB |
| Cargo insurance | 0.1–0.5% of CIF |
| Import duty | 0–25% of CIF (varies by HS code) |
| Customs brokerage | $100–$350 flat per shipment |
| Port / terminal handling | $150–$400 per shipment |
| Inland delivery to warehouse | varies by distance |
The Costs Most Importers Forget
First-time and experienced importers alike regularly miss these line items when budgeting:
- Customs brokerage fee — your customs broker charges a flat fee per entry, typically $150–$350, separate from the duty itself.
- Port handling / ISF filing (US) — the destination terminal charges handling fees. In the US, ISF (Importer Security Filing) is also required and costs $25–$50 per filing.
- Chassis fee (US) — truck chassis rental at the port, typically $25–$75/day, charged separately from freight.
- Pier pass / port congestion surcharge — charged at major US and EU ports, varies by terminal.
- Duty on freight and insurance — because duty is on CIF (not FOB), you're paying duty on your freight cost too. This surprises many importers on high-value lanes.
How to Use This Calculator
- Enter your product cost per unit and quantity.
- Select the Incoterm that matches your purchase — FOB is most common for factory purchases.
- Enter the freight cost for the shipment (get this from your forwarder's quote).
- Enter insurance. If you don't have an exact number, use 0.15% of your CIF value as an estimate — or use the cargo insurance calculator first.
- Enter the import duty percentage for your HS code and destination country.
- Add customs fees (brokerage + port handling) and last-mile delivery.
- See your total landed cost and cost per unit — the numbers you need for pricing and budgeting.
Frequently Asked Questions
What is landed cost?
Landed cost is the total cost of getting a product from the factory to your warehouse, including product price, international freight, insurance, import duty, customs brokerage, port handling, and inland delivery. It's your real cost per unit before any markup is applied.
Why is customs duty calculated on CIF and not FOB?
Most countries calculate import duty on the CIF value (Cost + Insurance + Freight) because the government taxes the full declared value of goods at the point of import, including the cost of transportation. Using only the FOB price understates the duty base and leads to underpayment — which customs authorities will flag on audit. Always use CIF as your duty base.
What fees are included in landed cost?
A complete landed cost includes: product cost, international freight, cargo insurance, import duty (on CIF), VAT or GST (on CIF + duty), customs brokerage fee, port and terminal handling charges, and inland delivery to your warehouse. Skipping customs brokerage, port handling, or delivery is the most common reason for unexpected invoices after a shipment arrives.
How do I find my import duty rate?
Import duty rates are determined by your product's HS (Harmonized System) code and the destination country. Look up rates on your country's customs tariff database — USITC DataWeb for the US, the Trade Tariff for the UK, TARIC for the EU. Your customs broker can classify the product and confirm the exact applicable rate, including any preferential rates under trade agreements.
What is a typical landed cost percentage?
For most sea freight imports, landed cost adds 15–40% on top of the FOB factory price. Low-duty, high-value products (electronics) sit at the lower end. High-duty, bulky, or low-value products (textiles, furniture, toys) sit at the higher end. Always calculate with your actual numbers — industry averages are a starting point, not a substitute for the real calculation.
Related Tools
Before calculating landed cost, make sure your freight estimate is accurate. Use the CBM calculator to measure cargo volume and compare LCL vs FCL options to get the right freight input. To estimate your insurance cost separately, use the cargo insurance calculator. For Incoterms guidance, see the Incoterms guide.