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Landed cost calculator

What a unit actually costs once it is on your shelf, not what the supplier invoiced. Duty is applied to the goods plus freight and insurance, which is how it is normally charged and what most calculators get wrong, and import VAT is kept out of the cost because a VAT-registered business reclaims it.

Arithmetic and general information only — not financial, tax, legal or customs advice. Duty rates depend on the commodity code and country of origin; this takes the rate you enter.

The formula, and the two things usually got wrong

Landed cost is every cost of getting goods onto your shelf, divided by the units:

Landed cost per unit = (goods + freight + insurance + duty + clearance + other) ÷ units

1. Duty is not charged on the invoice value. On a CIF basis it is charged on the goods plus the freight and insurance that brought them in. Applying the duty rate to the product cost alone understates the bill on every shipment, and the gap grows with freight.
2. Import VAT is not a cost if you reclaim it. For a VAT-registered business it is paid and recovered, so it belongs in a cashflow forecast and not in a per-unit cost. Leaving it in inflates the unit cost and quietly wrecks every margin worked out from it.

How to split costs across a mixed shipment

One container rarely holds one product. How you apportion the freight decides which items look profitable:

• By units — simplest, and wrong whenever items differ much in size or weight.
• By value — common and convenient; it loads cost onto expensive items whether or not they caused it.
• By volume or weight — closest to what actually drives a freight bill, and the one to use when the mix is uneven.

Any of them is defensible. Picking one and not knowing which you picked is not, because it is the usual reason a product that looks profitable in the spreadsheet is not profitable in the bank.

What this cannot know

It takes the duty rate you enter. The rate that actually applies depends on the commodity code and the country of origin, and a trade agreement can take it to zero if the goods qualify and you hold the paperwork to prove it. It also cannot see demurrage, a failed inspection, or currency moving between order and payment — the three things that most often make the real number worse than the planned one.

Common questions

What is the landed cost formula?

Landed cost is the unit price plus every cost of getting the goods to you: freight, insurance, duty, customs clearance and handling, divided across the units in the shipment. The part most formulas miss is that duty is normally charged on the goods plus freight and insurance rather than on the invoice value alone, so applying the duty rate to the product cost understates it.

Is import VAT part of landed cost?

Not for a VAT-registered business. Import VAT is paid and then reclaimed, so it is a cashflow event rather than a cost, and including it in a per-unit cost inflates the figure and distorts every margin calculated from it. If you are not VAT registered it is a genuine cost and belongs in the total.

What is duty actually charged on?

Under a CIF basis it is charged on the value of the goods plus the freight and insurance to bring them in, not on the goods alone. Rates depend on the commodity code and the country of origin, and a trade agreement can reduce the rate to zero if the goods qualify and you hold the right paperwork. The rate is the input here; the base is what this gets right.

How do I split shipping across different products in one shipment?

By whatever reflects what actually drives the cost. Splitting by unit count is simplest and is wrong when items differ a lot in size or weight; splitting by value is common and convenient; splitting by volume or weight is the most accurate for freight. The point is to pick one, apply it consistently, and know which one you chose when the margins look odd.

Why is my margin lower than expected once landed cost is in?

Usually because the original margin was calculated against the invoice price rather than the delivered cost. On a low-value, bulky item freight and duty can be a larger share of the landed cost than the goods, which is why the breakdown below shows each component as a percentage rather than just a total.

Is anything I type here sent to you?

No. The calculation runs entirely in your browser. There is no account and no email field, and the figures never leave the page, including to us.

The written guide to landed cost · Margin and markup calculator · Break-even calculator