Landed cost is what a unit costs once it is in your warehouse. Importers who price from the supplier invoice alone find out later that freight, duty and fees ate the margin.
Components
- Product cost from the supplier invoice, in the invoice currency.
- International freight and insurance.
- Import duty, based on the customs value of the goods and their tariff classification. In the United States, customs value is generally the transaction value, which normally excludes international freight and insurance.
- Customs fees charged on the entry. Their rates are set by U.S. Customs and Border Protection and reset periodically, so read the current figures from CBP instead of hard-coding them.
- Customs broker fees.
- Port and terminal charges, drayage and inland freight.
- Storage and handling before the goods are available.
Allocation: the basis matters
Costs that apply to a whole shipment have to be spread over its items. Choose the basis that matches the cost: value for duty and insurance, weight or volume for freight, line count or units for handling.
A simple made-up example
The numbers below are invented for arithmetic only. Your duty rate depends on tariff classification and country of origin.
| Component | Amount | Basis |
|---|---|---|
| Product, 1,000 units at $10.00 | $10,000 | Supplier invoice |
| International freight | $1,200 | Freight invoice |
| Duty at 5% of $10,000 | $500 | Entry summary |
| Customs broker fee | $150 | Broker invoice |
| Drayage | $350 | Trucker invoice |
| Total landed cost | $12,200 | Sum |
| Landed cost per unit | $12.20 | Total divided by 1,000 |
Estimate first, then true up
Goods usually arrive before the final invoices. Receive at an estimated landed cost, then post the difference when each invoice and the entry summary arrive. The system should keep the estimate and the final figure so you can see how good your estimates are.
Multiple currencies
Convert each component at the rate you decide, such as the payment date or a rate fixed at receipt. Record which rule you use so the numbers can be reproduced.