Import & Export
How to Calculate Landed Cost
Step-by-step landed cost formula — product, freight, duty, VAT, and fees with a worked example.
Landed Cost = Product + Freight + Insurance + Duty + VAT + Local charges. Use HS code and CIF customs value.
Step 1 — Establish Product Value
Start from the invoice value under your Incoterm. For FOB imports, add international freight and insurance to reach CIF customs value where required by local law.
Convert to local currency at the rate your finance team uses for budgeting — not necessarily the payment date rate.
Step 2 — Add International Logistics
Include ocean/air freight, BAF, documentation, and origin charges not in the seller invoice. Get quotes matching your volume and Incoterm split.
Reconcile chargeable weight vs actual weight for air — use our chargeable weight tool if needed.
Step 3 — Calculate Import Duty
Duty = Customs value × Duty rate (by HS code and origin). Apply preferential rate only with valid certificate of origin.
Some countries add anti-dumping or safeguard duties on top of MFN rate.
Step 4 — Add VAT/GST and Local Fees
Many jurisdictions tax (Customs value + Duty) × VAT rate. Add brokerage, port handling, inspection, and inland delivery.
Demurrage and storage are often excluded from initial quotes — add contingency.
Step 5 — Per-Unit Landed Cost
Divide total landed cost by import quantity for unit economics and retail pricing. Compare scenarios when MOQ or freight mode changes.
Run sensitivity on FX and duty rate — especially for contract manufacturing.
Examples
Worked example
CIF USD 50,000 · Duty 10% USD 5,000 · VAT 13% on (50k+5k) · Local USD 800 → total landed USD 61,650.
Common mistake
Using FOB invoice only and forgetting freight → understating duty base and margin risk.
FAQ
- What is the customs value base?
- Often CIF at border; rules vary — confirm with your broker.
- Include bank fees?
- Yes for true economic landed cost, especially L/C and TT charges.
- How often to recalculate?
- Each new shipment quote and when FX or duty rates change.
- Free samples?
- May still attract duty — declared value rules apply.
- DDP quote from seller?
- Seller's DDP may still exclude your inland — verify breakdown.
Conclusion
Use our Landed Cost Calculator after you gather duty rate and freight. Cross-check with What is Landed Cost?