How to Calculate Landed Cost: Formula, Example, and Template

Landed cost is the total cost of getting goods into your warehouse in sellable condition. It is not the price on a quotation alone. Freight, import charges, handling, and yield can all change the number you use to compare suppliers or set a selling price.

Planning against unit price alone can leave material order costs out of a comparison. Record the assumptions before the order and replace them with actual costs after arrival.

The components

Component	Notes
Unit price × quantity	The only figure most quotes contain
Origin charges	Export clearance, documentation, origin terminal handling
Freight	Sea, air or courier; varies by route, volume, and mode
Insurance	Included under some trade terms, not others
Duty and tariffs	Depends on classification code and country of origin
Import clearance	Broker fee, entry filing, destination terminal handling
Inland delivery	Port or airport to your warehouse
Financing	Cost of capital tied up in a deposit for weeks or months
Defect allowance	The share of the shipment you expect to write off

The lines that are not included depend on the route and the trade term. Record them separately so a quote can be compared with another quote on the same basis.

The calculation

Landed cost per unit  =  Total of all components  ÷  Units that arrive sellable

The denominator matters more than it looks. Dividing by units ordered rather than units that arrive sellable understates the true cost of every order that carries a defect rate. If you expect 2 percent unusable and order 1,000, your real denominator is 980.

Download the editable landed cost template. It keeps estimated and actual costs in separate columns and calculates cost per ordered and sellable unit. Enter only costs that are not already included in the trade term. It is not a duty-rate or tax calculator.

A worked shape

Take an order of 1,000 units at 4.00 per unit, quoted FOB origin port.

Line	Amount
Goods, 1,000 × 4.00	4,000
Sea freight	900
Insurance	60
Duty	260
Customs clearance and broker	180
Destination terminal handling	220
Inland delivery	150
Financing, deposit held 10 weeks	70
Total	5,840
Sellable units after 2 percent defect	980
Landed cost per unit	5.96

The quoted price was 4.00. Under these assumptions the cost per sellable unit is 5.96, which is 49 percent higher. The figures are illustrative, not benchmarks. Every line can vary by route, category, volume, trade term, and destination.

Estimate before ordering and record actuals after arrival

An estimate helps you decide whether to place an order. Actual costs help you improve the next one. Keep both in the same structure: goods, origin charges, freight, insurance, import charges, destination handling, delivery, and any documented financing cost.

For the first estimate, leave a cost blank only when you have confirmed it does not apply. After arrival, replace assumptions with invoices, broker statements, and carrier charges. If your actual sellable quantity differs from the estimate, update the denominator as well as the costs.

The trade term changes what is already included

You cannot compare two quotes until both are on the same basis. An EXW price can leave collection and export formalities with the buyer. A FOB price includes different origin responsibilities. A CIF price includes freight and insurance to the destination port but can still leave import, clearance, and inland delivery with the buyer. Confirm the named place and the applicable edition of the trade term before assigning a cost to either party.

First lock comparable RFQ fields, then convert every quote to landed cost before comparing anything. A lower EXW price can land higher than a higher delivered quote once both are expressed on the same basis. The terms are compared in EXW vs FOB vs CIF.

Confirm duty and importer responsibilities

Duty can depend on the classification code applied to the goods and their country of origin. Confirm both for the relevant importer of record and destination market rather than rely only on supplier paperwork.

• Ask for the classification code and the country of origin explicitly
• Confirm the classification with a customs broker or other qualified adviser rather than accepting the supplier’s
• Confirm the compliance obligations for the importer of record and the destination market

Use qualified customs or legal advice where the classification or import obligations are unclear.

Using the number

Once you have landed cost per unit, three things become answerable that were not before:

• Whether the product works at all. Landed cost against realistic selling price, after marketplace fees and returns.
• Which supplier is actually cheaper. On the same basis, which is rarely the same ranking as the quotes.
• Whether volume helps. Freight and duty scale with the order while clearance and documentation largely do not, so the per-unit curve flattens rather than falling forever.

Test the full cost before committing to a larger order to get a lower unit price. A higher volume can spread fixed charges across more units, but it also increases the cash and inventory at risk. That trade-off is covered in what is MOQ.

From landed cost to retail price

Landed cost tells you what a sellable unit cost to put on your shelf. It does not tell you what the unit earns. To test a retail price, add the costs that occur each time you sell, then see what is left.

Contribution per unit  =  Retail price
                          − Landed cost per sellable unit
                          − Platform and payment fees per sale
                          − Fulfilment and packing per sale
                          − Returns allowance
                          − Marketing cost per sale

If the result is thin or negative at the price you can realistically charge, a cheaper supplier quote is rarely enough to fix it; recheck the selling price, the fee lines, or the product.

Supplier-side costs that sit outside the unit price

Before the freight and import lines, check whether the supplier charges any of these separately. Each one belongs in the cost sheet as its own line, even when it is zero.

• Samples and sample shipping
• Account set-up, order handling, or small-order surcharges
• Custom packaging, labelling, or barcodes
• Tooling or setup for a custom version
• Payment or bank transfer charges

Columns for a wholesale sourcing cost sheet

Keep one row per cost line and one sheet per order, using these columns:

Column	What goes in it
Cost line	Goods, supplier charges, origin, freight, insurance, duty, clearance, delivery, financing, platform fees, fulfilment, returns, marketing
Basis	Per order, per shipment, per unit, or per sale
Estimated amount	Your planning figure before ordering
Source of estimate	Quote, rate card, official fee page, or assumption
Actual amount	The invoiced or charged figure after arrival or sale
Variance	Actual minus estimated
Per sellable unit	The line total divided by sellable units, or the per-sale amount
Included in price?	Yes where a supplier or trade term already covers the cost

Platform fee rows

Marketplace fees change by category, plan, size, and service, so leave them as placeholder rows until you have looked up the current figures on the platform’s official fee page. On Amazon, for example, the official Sell on Amazon pricing page describes selling plan fees and referral fees, along with fulfilment fees if you use Fulfillment by Amazon and optional costs such as advertising. Enter each as a separate row with the date you checked it, rather than as a single blended percentage.

The landed cost template covers the import side of the sheet. Add the selling rows below it, and keep estimates and actuals in separate columns as you do for the import lines.

Where to go next

Confirm the trade term with EXW vs FOB vs CIF before comparing which costs belong in each quote. For the wider order structure — pricing, payment and inspection — see buying guides.