How to Calculate Landed Cost for Imported Products
By Raúl Vaquerizo Tortosa · Published October 26, 2026
The price on a supplier invoice is the start of your product cost, not the end of it. By the time goods reach your shelf you have also paid for freight, insurance, customs duty, possibly import tax, a customs broker and local delivery. Together these make up the landed cost, and it is the number your pricing should be built on.
The components
| Component | Typical currency | Notes |
|---|---|---|
| Product cost | Supplier’s currency | Unit price × quantity on the commercial invoice |
| International freight | Supplier’s or yours | Sea, air or courier charges to the destination |
| Cargo insurance | Supplier’s or yours | Often a small percentage of the goods value |
| Customs duty | Yours | Tariff rate × customs value |
| Import tax (VAT / GST) | Yours | May be recoverable for registered businesses |
| Brokerage and clearance | Yours | Broker fees, customs processing, port handling |
| Other costs | Yours | Inland delivery, inspections, storage at port |
Step 1: Put everything in one currency
Never add amounts in different currencies. Convert the supplier invoice, and freight if it was quoted in a foreign currency, into your own currency first. Use the rate you actually pay, including your bank’s or payment provider’s margin, for your own costing. Customs authorities use their own official rate for duty, which can differ slightly.
Step 2: Find the customs value
Duty is charged on the customs value, and how that is defined matters:
- In the United States, the customs value is generally the transaction value of the goods, without international freight and insurance.
- In the UK and the EU, the customs value generally includes the cost of freight and insurance to the border (often described as CIF).
The same shipment can therefore attract noticeably different duty depending on where it is imported. Always confirm the valuation rules for your shipment.
Step 3: Calculate duty
Look up the tariff code (HS code) for your product in the destination’s official tariff and note the duty rate for your country of origin. Then:
Duty = duty rate × customs value
Watch for extras on top of the standard rate, such as anti-dumping duties, additional duties on goods from particular countries, or preferential rates under trade agreements that require proof of origin. Rules in this area have changed often in recent years, so check them for every new product and periodically for existing ones.
Step 4: Calculate import tax
Where import VAT or GST applies, it is commonly charged on the customs value plus the duty (and in some cases other costs), so duty is partly taxed again:
Import tax = tax rate × (customs value + duty)
If your business is registered and can reclaim this tax, it is a cash-flow cost rather than a true cost, and you would normally leave it out of landed cost. You still need the cash to pay it at the border.
Step 5: Add fees and divide by quantity
Add brokerage, clearance and other local costs, then divide by the number of units:
Landed cost per unit = (goods + freight + insurance + duty + non-recoverable tax + fees) ÷ units
A worked example
An illustrative importer brings in 2,000 units at $3.00 each into a CIF-basis country. The exchange rate is 0.79, freight is $900 and insurance $30 (both in USD), duty is 6%, import VAT is 20% and recoverable, and brokerage plus delivery cost 260 in local currency.
- Goods: 2,000 × $3.00 = $6,000 × 0.79 = 4,740.00
- Freight and insurance: $930 × 0.79 = 734.70
- Customs value: 5,474.70
- Duty at 6%: 328.48
- VAT at 20% on 5,803.18: 1,160.64 (recoverable, excluded)
- Fees: 260.00
- Landed cost: 6,063.18, or 3.03 per unit
The factory-gate cost was 2.37 per unit. Landed, it is 3.03 - about 28% higher. Pricing from the invoice alone would overstate the margin on every unit.
You can reproduce this with the landed cost calculator.
Allocating costs across several products
When one shipment contains several products, freight and fees need to be split between them. Common methods:
- By value: simple, and matches how duty and insurance behave.
- By weight: better for air freight and courier, which price by weight.
- By volume: better for sea freight, which prices by space.
Pick the method that best matches what drove each cost, and use it consistently so your margins are comparable over time. Duty should always be calculated per product, because each product has its own tariff rate.
Common mistakes
- Using the supplier price as product cost in pricing and margin calculations.
- Applying duty to the wrong value (product only versus CIF).
- Forgetting that import tax may be charged on top of duty.
- Treating recoverable VAT as a cost - or forgetting non-recoverable tax entirely.
- Recalculating rarely, even though exchange rates, freight prices and duty rules move.
Next steps
Once you know your landed cost per unit, use it as the product cost in the Shopify profit margin calculator or the Amazon FBA calculator, and use the landed value of your stock to estimate what it costs to hold with the inventory carrying cost calculator.
This guide explains general principles. It is not customs or tax advice; confirm the rules for your goods with the official tariff or a licensed customs broker.