Understanding landed cost for imported lots
The unit price on an overseas lot is not what the goods will cost you. Landed cost — the all-in price of getting a unit onto your warehouse shelf — is the only number worth comparing against your current supply. Here is how to build it.
What landed cost includes
Landed cost is the sum of everything it takes to get the goods to your door, divided by sellable units:
- The goods themselves (the negotiated lot price).
- International freight — sea for most lots, air when speed justifies the cost.
- Cargo insurance.
- Customs duties, set by your market's tariff for the product's HS code and origin.
- Import VAT or sales tax (recoverable in many markets, but it affects cash flow either way).
- Port handling, customs brokerage, and documentation fees.
- Inland transport from port to warehouse.
- Any relabelling, re-packing, or compliance work the lot needs for your market.
Duties depend on the HS code and origin
Every product has an HS (Harmonized System) classification code, and your market's tariff schedule sets the duty rate for that code — sometimes varying by the goods' origin country under trade agreements. Two similar products can carry very different rates. Get the HS code right before you negotiate: a customs broker will classify a product quickly, and the duty rate can make or break a deal on low-margin categories.
A simple way to estimate
For a first pass, before quotes are in:
- Start with the lot price.
- Add a freight estimate — ask for the lot's volume and weight; a forwarder can quote a container or groupage rate in a day.
- Apply the duty rate for the HS code to the customs value (typically goods plus freight plus insurance).
- Add import VAT at your market's rate on the duty-inclusive value, noting whether you can recover it.
- Add a fixed allowance for port, brokerage, and inland transport.
- Divide by sellable units.
If the deal still looks good with round-number estimates, refine with real quotes. If it only works with optimistic estimates, it does not work.
Common mistakes
- Comparing the lot's unit price to a local wholesale price and "seeing margin" before adding a single import cost.
- Forgetting that duty is charged on the freight-inclusive value in most markets, not the goods alone.
- Ignoring cash-flow timing: duties and VAT are paid at the border, weeks before the first unit sells.
- Skipping the relabelling line when the lot was packed for a different market.
- Using air freight economics for a sea-freight product, or vice versa.
How this plays out on Trade Sourcer
Offers on Trade Sourcer list quantity, origin, and target markets, which is most of what a forwarder and broker need for a quick quote. Raise logistics early in the WhatsApp conversation — the team coordinates shipping and documentation as part of closing the deal, and factoring the landed cost in from the first message leads to faster, cleaner negotiations.