What Is Landed Cost?
Landed cost is the true total cost of an imported product including duties, freight, and insurance. Essential for accurate margin calculations.
Key Takeaways
- Landed cost = product cost + freight + insurance + import duties + customs clearance.
- Many importers underestimate landed cost and discover too late that margins are worse than planned.
- Use AskBiz's free Landed Cost Calculator to get a complete breakdown before placing orders.
What landed cost includes
Landed cost is every cost incurred to get a product from your supplier's factory to your warehouse or fulfilment centre. It includes: the supplier price (ex-works or FOB), international freight, cargo insurance, import duty (based on the product's HS code and origin country), VAT on import, and customs clearance agent fees. Each element can be significant.
Why product cost alone is misleading
A product that costs £10 from a Chinese manufacturer may have a landed cost of £16–18 by the time it arrives in your UK warehouse. If you've priced it at £30 expecting a 67% gross margin, your actual margin may be closer to 40–45%. This is a common and costly error for businesses new to importing.
The key variables
Import duty rates vary by product category (HS code) and country of origin. The UK Global Tariff applies most-favoured-nation rates, but Free Trade Agreements with certain countries (Canada, Japan, South Korea, Australia) provide zero or reduced duty. Freight costs vary by method (sea, air, road) and fluctuate significantly with global demand.
Calculating it accurately
Use AskBiz's free Landed Cost Calculator: enter your origin country, destination, product category, supplier cost, and freight method. The calculator applies current UK duty rates, estimates freight, adds insurance at 0.5% of CIF value, and totals all costs including VAT — giving you true landed cost per unit before you commit to an order.