Import & Export
What is Landed Cost?
Landed cost is the total expense to get imported goods to your warehouse — product, freight, duty, taxes, and handling.
Landed cost = purchase price + international logistics + import duty/VAT + inland delivery and fees.
Definition and Scope
Landed cost is the all-in price of imported goods at the buyer's door or warehouse — not just the FOB or CIF invoice value.
It typically includes: unit purchase price, export packing, international freight, insurance (if not in CIF), import customs duty, import VAT/GST, customs brokerage, port/terminal charges, and final inland haulage.
Buyers use landed cost to compare suppliers in different countries and to set retail margins. Sellers quoting FOB still benefit from understanding buyer landed cost for competitiveness.
Main Cost Components
Product cost — contract value under the agreed Incoterm (EXW, FOB, CIF, etc.).
Logistics — ocean/air freight, fuel surcharges, THC, documentation fees.
Duties & taxes — calculated on customs value (CIF basis in many countries) plus anti-dumping or preferential rates if COO applies.
Hidden costs — inspection, storage, demurrage, currency conversion, bank charges on L/C or T/T.
Why It Matters in Practice
Two quotes with the same FOB price can yield very different landed costs if freight lanes, duty rates, or VAT rules differ.
Procurement teams should model landed cost before signing contracts — especially when choosing between near-shore and Asia sourcing.
Use a landed cost calculator with realistic duty rates and freight; update assumptions when exchange rates move.
Documents That Feed Landed Cost
Commercial invoice (declared value), packing list (weight/volume for freight), B/L or AWB (freight proof), certificate of origin (preferential duty), and customs entry forms.
Mismatch between invoice and packing list can trigger re-valuation and higher duty — see our invoice–packing list consistency guide.
Examples
Example — FOB vs landed
FOB USD 10,000 + freight USD 1,200 + duty 8% + VAT 13% + brokerage USD 350 → landed well above invoice.
Example — COO savings
Preferential COO reduces duty from 12% to 3% — landed cost drops materially on high-volume SKUs.
FAQ
- Is landed cost the same as DDP price?
- DDP is an Incoterm where seller pays duty — landed cost is the buyer's total cost concept regardless of term.
- Does CIF include all landed cost?
- No — CIF covers cost, insurance, freight to port; duty, VAT, and inland delivery are usually extra.
- What currency for landed cost?
- Model in your functional currency using spot or hedged FX rates.
- Who calculates import duty?
- Customs authority based on declared value, HS code, and origin — see our duty calculation tutorial.
- Can I use FOB price as landed cost?
- No — FOB excludes international freight and all import-side charges.
Conclusion
Model landed cost early. Pair this guide with How to Calculate Landed Cost and our calculator tools.