Published December 12, 2025 · Updated June 1, 2026 · 7 min read
Cross-border sellers routinely underestimate how much their products actually cost. They use the factory price to calculate margins — then get surprised when their first shipment arrives and the true per-unit cost is 30–50% higher than expected. Landed cost is the number you actually need to use when pricing for profit.
Landed cost is the total cost to get one unit of product from your factory to your warehouse or fulfillment center. It includes:
If you're calculating your Amazon FBA profit and you use the factory price instead of landed cost, your margin estimate will be wrong — often by $3–10 per unit.
Customs authorities in most countries calculate import duty on the CIF value — Cost + Insurance + Freight. This means freight is included in the taxable base, making effective duty rates higher than the nominal percentage suggests.
CIF Value = Cargo Value + Freight + Insurance
Import Duty = CIF Value × Duty Rate
VAT Base = CIF Value + Import Duty
VAT Amount = VAT Base × VAT Rate
Landed Cost = CIF Value + Import Duty + VAT + Customs FeesThen per unit:
Cost Per Unit = Total Landed Cost ÷ Units OrderedLet's walk through a real example. You're importing 500 units of a kitchen gadget from China to the US:
| Input | Value |
|---|---|
| FOB unit price | $8.00 |
| Units ordered | 500 |
| Cargo value | $4,000 |
| Sea freight (China → LA) | $600 |
| Insurance (0.3% of cargo) | $12 |
| CIF value | $4,612 |
| Import duty rate (HS code) | 5% |
| Import duty amount | $230.60 |
| US VAT/GST | 0% (US has no federal VAT) |
| Customs brokerage | $150 |
| Total Landed Cost | $4,992.60 |
| Cost Per Unit | $9.99 |
In this case, the landed cost ($9.99) is 25% higher than the FOB factory price ($8.00). A seller who priced based on $8 factory cost would have margins 25% thinner than expected.
Calculate landed cost automatically
Enter your FOB price, freight, insurance, duty rate, and VAT to get total landed cost and cost per unit instantly.
Open Landed Cost Calculator →Every product has an HS code (Harmonized System code) — a standardized 6–10 digit number that customs authorities worldwide use to classify goods and apply duties.
For China-origin goods entering the US, check for any Section 301 tariff surcharges in addition to the base rate — many product categories have additional 7.5–25% tariffs beyond the standard HTS rate.
| Freight Type | Typical Cost | Transit Time | Best For |
|---|---|---|---|
| Sea (FCL) | $0.80–$2.00/kg | 25–35 days | Large orders (1,000+ units) |
| Sea (LCL) | $2.00–$4.00/kg | 30–40 days | Medium orders (200–999 units) |
| Air freight | $4.00–$8.00/kg | 5–7 days | Urgent restocks, light products |
| Express (DHL/FedEx) | $8.00–$15.00/kg | 3–5 days | Samples, very small quantities |
For a 20 kg shipment (500 units at 40g each), the freight cost difference between sea LCL ($60) and air ($120) is only $60 on a $5,000 order — sometimes worth paying for speed when you're running low on FBA stock.
Many countries charge VAT or GST at import in addition to import duty. This is a cash flow cost even if you can reclaim it as a VAT-registered business:
| Country | Import VAT/GST Rate | Reclaimable? |
|---|---|---|
| United States | 0% (no federal VAT) | N/A |
| United Kingdom | 20% | Yes, if VAT registered |
| European Union | 20–25% (varies by country) | Yes, if VAT registered |
| Australia | 10% GST | Yes, if GST registered |
| Canada | 5% GST + provincial | Yes, if registered |
For UK/EU sellers: even if you reclaim the VAT quarterly, you're floating that cash for 90+ days. On a $10,000 shipment with 20% UK VAT, that's $2,000 tied up. Factor this into your cash flow planning, not just your unit economics.
Real landed costs are hard to predict precisely before your first shipment. Freight quotes change, actual product weights may differ from estimates, and customs can reclassify your HS code. Experienced importers add a 5–10% buffer to their estimated landed cost when projecting profit margins.
The Procurement Budget Calculator lets you add a safety buffer percentage to your total order estimate, so you know how much cash to have ready before placing an order.
Landed cost is the total cost of getting one unit of product to your warehouse, including FOB factory price, freight, insurance, import duty, VAT, and customs fees. It's the number you should use — not the factory price — when calculating profit margins.
CIF stands for Cost, Insurance, and Freight. Most countries apply import duty to the CIF value, meaning freight and insurance are included in the taxable base. This makes effective duties higher than the nominal percentage suggests.
Look up your product's HS code on your destination country's customs authority website. US sellers use the HTS at usitc.gov; UK sellers use trade-tariff.service.gov.uk; EU sellers use the TARIC database. For US imports from China, also check for Section 301 tariff surcharges.
Sea freight typically costs $0.80–$4.00 per kg with 25–40 day transit times. Air freight costs $4–$8 per kg with 5–7 day transit. For Amazon sellers, sea freight is standard for planned bulk orders; air freight is used for urgent restocks and product launches.