How to calculate landed cost (and why most sellers get it wrong)
Résumé : Freight is only part of the story. Here's a step-by-step method to know your true cost per unit before you commit to inventory.
What is landed cost?
Landed cost is the total cost of getting one unit of product onto your shelf, ready to sell: product cost plus every freight, handling, customs and insurance charge along the way. If you price from product cost alone, your margin is a guess.
The landed cost formula
Landed cost per unit = (Product + Freight + Insurance + Duties & taxes + Handling & fees + Last mile) ÷ sellable units
Walk through each component
Product cost
What you pay the supplier, including packaging and any prep.
International freight
Ocean or ground charges, fuel surcharges, origin and destination terminal fees.
Insurance
Typically a small percentage of cargo value; cheap relative to the risk it covers.
Duties and taxes
Calculated from your HS code and the customs value (often CIF value). This is where classification accuracy pays for itself.
Handling and fees
Consolidation, documentation, customs brokerage, warehouse in/out charges.
Last mile
Domestic transport to your warehouse or your customer.
The three mistakes that distort landed cost
- Dividing by units bought, not units sellable. Damaged, missing or unsellable units concentrate cost on the ones you can actually sell.
- Ignoring dimensional weight and volume. Freight is priced by space as much as weight; bulky-light products cost more than their kilos suggest.
- Treating duties as an afterthought. Duty rates vary widely between similar HS codes; know the rate before you buy, not after.
BLS tip: ask for a landed-cost estimate with your quote. We break freight, fees and estimated duties into a per-unit number so you can compare suppliers and routes on equal terms.
