Landed Cost: What It Really Costs to Import
Landed cost is the all-in cost to get imported goods to your door: goods + freight + insurance + duty + fees. It’s the number that belongs in your pricing — not the supplier’s invoice, which stops at the factory gate. Getting there is a three-step chain: customs value → duty → landed cost. Here it is, worked end to end on a real shipment.
Why the invoice price is a trap
A $50,000 purchase order feels like a $50,000 cost. It isn’t. Freight, insurance, duty, and broker fees all land on top before the goods are yours to sell — and on many imports they add 15–25% or more. Price off the invoice and your margin quietly evaporates at the border. Landed cost is the honest number, and it’s built in three steps.
Step 1 — Customs value
Duty isn’t charged on the goods price alone; it’s charged on the customs value, and how much freight and insurance that includes depends on your valuation basis. On a CIF basis the value includes both: $50,000 goods + $4,000 freight + $500 insurance = $54,500. On an FOB basis it’s just the $50,000 goods. Same shipment, a $4,500 swing in the dutiable base — which is why the basis matters. The Customs Value Calculator handles FOB, CFR, and CIF, and customs value: FOB vs CFR vs CIF breaks down which basis applies and what else is dutiable.
Step 2 — Import duty
Duty is the tariff rate applied to the customs value. At a 6.5% rate on the $54,500 CIF value, that’s $3,542.50. Add brokerage and the merchandise processing fee — say $500 — and the charges at the border total $4,042.50, an effective 7.4% of the customs value. (Outside the US, add VAT or GST here too, usually on the duty-inclusive base.) The Import Duty Calculator does the rate, tax, and fees together, and how to calculate import duty walks the VAT and effective-rate detail.
Step 3 — Landed cost
Now add it all up: goods, the freight and insurance you actually paid, the duty, and the fees.
| Component | Amount |
|---|---|
| Goods | $50,000.00 |
| Freight | $4,000.00 |
| Insurance | $500.00 |
| Duty (6.5%) | $3,542.50 |
| Broker & fees | $500.00 |
| Landed cost | $58,542.50 |
On 2,000 units, that’s $29.27 a unit landed against a $25.00 goods cost — a 17% markup over the invoice you have to earn back before the first dollar of profit. The Landed Cost Calculator returns the total, the per-unit figure, and the markup in one step.
The invoice tells you what you paid the supplier. Landed cost tells you what the goods actually cost you.
Who pays which piece: Incoterms
Which of these costs are even yours depends on the Incoterm you agreed. Under EXW or FOB, freight, insurance, duty, and fees are the buyer’s; under DDP the seller carries almost everything to your door, duty included. Same goods, very different landed cost on your books depending on the three letters on the contract. The Incoterms Explorer shows who owns each cost and risk under all eleven 2020 rules, and Incoterms 2020 explained walks each one in plain English.