Introduction
“Landed cost” is the total per-unit cost of a product when it arrives at the destination warehouse — factoring in every line item, not just the factory quote. Buyers who plan against unit price alone are consistently wrong on margin.
This article breaks down every line item in a typical China import, so buyers can build a realistic landed cost.
1. Factory Unit Price
The supplier’s quote for the finished product, in the specified quantity, at the specified specification. Everything else is layered on top.
2. Tooling And One-Off Costs
For custom or private-label products, first-order tooling includes:
- Injection moulds (custom plastic parts): $2,000–20,000+
- Custom packaging plates: $200–1,000
- Sample development: $200–2,000
- Custom branding setup: variable
These are one-time costs, amortised across the first production run or across future orders.
3. Payment And Transfer Costs
- Wire transfer fees: $30–60 per transfer, both sides
- Currency conversion spread: 1–3% depending on bank
4. Quality Control
- Pre-shipment inspection: $200–400 per inspection day
- Additional inspection stages (during-production, container loading): $200–400 each
Typically 1–3% of order value.
5. Freight
Covered in the shipping guide. The relevant point for cost planning: freight can be 5–30% of landed cost depending on product density and shipment size. Small dense products absorb freight easily; large light products get punished.
6. Import Duties And Taxes
Depends on destination country and product category:
- US: 0–25% tariff depending on HS code and current trade policy
- EU: 0–17% typical for most consumer goods
- UK: similar to EU plus VAT
- Australia: 0–5% plus GST
- Canada: 0–20% plus GST/PST
Confirm the exact HS code and applicable rates for the product before ordering. Categorisation errors are the most common customs dispute.
7. Customs Broker
- Broker fee: $75–200 per shipment
- Bond fee (US): $50–100 per shipment or $500+ per year for continuous bonds
8. Destination Handling
- Port fees, terminal handling, chassis: $200–600 per container
- Delivery from port to warehouse: $200–800 depending on distance
- Warehouse receiving fees if using a 3PL
9. Insurance
- Marine cargo insurance: 0.2–0.5% of shipment value
10. Financing Cost (Often Missed)
The deposit is paid 30–45 days before the shipment ships and 60–90 days before it arrives. Working capital is tied up during this window. For a $50,000 order at 8% cost of capital, this is roughly $500–800 in financing cost per order.
Building The Actual Landed Cost
Total landed cost per unit =
“` Factory unit price + Amortised tooling + QC cost per unit + Freight per unit + Duties per unit + Customs/broker per unit + Destination handling per unit + Insurance per unit + Financing per unit “`
For most consumer products, landed cost is 25–60% higher than the factory unit price. Buyers who assume “10–15%” are usually surprised.
FAQ
Which line item surprises importers the most? Duties and destination handling. Freight is the item everyone remembers; duties and port charges are the items people forget.
Can any of these be reduced? Freight can be optimised by mode and volume; duties can sometimes be reduced by HS code review; unit price by supplier negotiation. Broker fees and payment fees are largely fixed.
Should I build landed cost per SKU or per shipment? Per SKU. Different SKUs have different freight and duty exposure; blended cost hides which items make money.
Get A Landed Cost Model Before You Order
Building a realistic landed cost before the PO is signed prevents most margin surprises. If you would like Hansen to help build one, start a project.