How to use the landed cost calculator
The calculator covers one shipment. Enter its totals, and it spreads the costs across the units.
- Currencies and product cost. Choose your currency and the currency on the supplier’s invoice, then enter the price per unit and the number of units. If the two currencies differ, enter the exchange rate you will pay; the default is only an example.
- Customs valuation basis. FOB values the goods alone, as the US does. CIF adds international freight and insurance, as the EU and many other countries do. This is the rule customs applies, not the Incoterm in your purchase contract.
- Freight and insurance to your country’s port or airport, from your forwarder’s quote. If the supplier’s price already includes shipping, enter 0 here.
- Duty and import VAT rates. Both depend on the product’s HS code, its origin and the importing country, so look them up for your own goods; the 5% default is a placeholder, not a typical rate. For the US, leave import VAT at 0.
- Fees and delivery: the customs broker’s invoice, port and terminal charges, and trucking from the port.
- Target margin, to see the selling price that keeps it.
The table under the results lists every component per shipment and per unit. The chart sets your valuation basis beside the other one, so you can see what the choice changes.
How landed cost is calculated
CIF value = Product cost + Freight + Insurance
Customs value = Product cost (FOB basis) or CIF value (CIF basis)
Duty = Customs value × Duty rate
Import VAT = (CIF value + Duty) × VAT rate
Landed cost = Product cost + Freight + Insurance + Duty + Import VAT + Fees + Inland deliveryAll amounts are in your currency. Import VAT you can reclaim is left out of the landed cost and shown separately as cash needed at the border. Landed cost per unit = Landed cost ÷ Units.
The selling price for a target margin works from the landed cost per unit:
A worked example
A US retailer buys 500 units from a European supplier at €12 each, an invoice of €6,000.00. At 1.16 dollars per euro, the goods cost $6,960.00.
Shipping adds $1,400.00 of freight and $90.00 of insurance. US customs charges duty on the goods’ value alone, so at 5% the duty is $348.00. The broker and port charge $250.00, and trucking to the warehouse costs $350.00.
The shipment’s landed cost is $9,398.00, or $18.80 a unit, 35.0% more than the product cost. To keep a 40% gross margin, each unit must sell for $31.33.
FOB or CIF: why the valuation basis matters
Duty is a percentage of the customs value, so what goes into that value matters as much as the rate. In the US, the customs value is normally the transaction value: the price actually paid for the goods, without international freight and insurance when those are identified separately. The EU, the UK and many other countries value imports on a CIF basis, adding the cost of transport and insurance up to the border.
On the example shipment, switching from FOB to CIF raises the duty from $348.00 to $422.50 and the landed cost to $9,472.50. The gap grows with the duty rate and with freight’s share of the shipment’s value, so it matters most for heavy, low-value goods shipped a long way.
Import VAT: a cost or only cash?
Most countries outside the US charge VAT or GST on imports, usually on the CIF value plus duty. A business registered for VAT normally reclaims it on its next return, so the money comes back, but it still has to be paid when the goods clear customs.
An EU retailer imports the same 500 units from a US supplier at $14 each. Converted at 0.86 euros per dollar and valued on a CIF basis, the duty is €375.50 and import VAT at 20% is €1,577.10. The retailer needs €10,062.60 in cash to land the shipment, but its landed cost for pricing is €8,485.50, or €16.97 a unit, because the VAT comes back. A buyer who cannot reclaim VAT would carry the full €10,062.60.
What moves the landed cost most
The duty rate is the input most likely to change after you have priced a product, because tariffs can be raised, suspended or cut by trade agreements. On the example shipment:
| Duty rate | Duty | Landed cost per unit | Price for a 40% margin |
|---|---|---|---|
| 0% | $0.00 | $18.10 | $30.17 |
| 5% | $348.00 | $18.80 | $31.33 |
| 25% | $1,740.00 | $21.58 | $35.97 |
The other big levers are the exchange rate, which reprices the whole invoice, and freight, which can be a large share of landed cost for bulky goods. Fixed costs such as broker fees fall per unit as shipments grow, which is one reason importers consolidate orders.
What this calculator does not include
- Classification and origin. The duty rate depends on the correct HS code and on rules of origin; a wrong code can mean back duties and penalties.
- Additional duties and fees. Anti-dumping, countervailing or retaliatory tariffs, excise duties, and US customs processing and harbor maintenance fees are not separate inputs. Add them to the duty rate or to fees.
- Low-value exemptions. De minimis thresholds differ by country and have changed in recent years, including in the US.
- Official exchange rates. Customs may convert the invoice at an official rate that differs from the one you pay.
- Sales tax and later costs. Sales tax or VAT charged to your customers, warehousing, returns and payment terms are outside landed cost. The product pricing calculator adds platform and card fees to the price.