A container arrives with a pallet of brass valves and a box of circulator pumps. The supplier’s invoice says what you paid for each. Then the freight bill arrives, then the customs entry, then the broker’s fee. None of those has a product name on it. All of them are part of what the goods cost you.
Landed cost
Landed cost is everything it took to get the goods onto your shelf: the price paid, freight, insurance, duty, and the handling and brokerage fees. It is the figure your margin is really measured against. Price from the supplier’s invoice alone and the margin you think you have is not the margin you will see in the bank.
+ share of other fees + duty) / units
The shared costs, and how to share them
Freight, insurance and the broker’s fee cover the whole shipment. They have to be spread across the lines, and the way you spread them changes the answer.
- By value. Each line carries a share in proportion to what it cost. The pumps, being dear, carry most of the freight. Right when the bill was driven by value, as insurance usually is.
- By weight. Each line carries a share in proportion to its kilos. The valves, being heavy, carry most of it. Right when the carrier charged by weight or volume, which is most sea and road freight.
- By quantity. Each unit carries the same share. Right when the items are much alike.
Spread the freight on that container by value and the valves look cheap. Spread it by weight and they look dearer, which is closer to what the carrier actually charged you. Pick the basis that matches what drove the bill, not the one that makes the number you wanted.
Duty is per line
Duty is a percentage set by each product’s tariff code, so it belongs on the line, not on the shipment. What it is a percentage of depends on where you import. Some countries charge duty on the goods alone. Others charge it on the goods plus freight and insurance to the border. The rate and the basis are yours to look up; the arithmetic is the same either way, and the calculator below does it both ways.
Two things to leave out
- Tax you can reclaim. Import VAT you recover is a cash-flow cost, not a cost of the goods. Leave it out. If you cannot recover it, it goes in with the other fees.
- The rate on the news. Use the exchange rate you actually paid at, including your bank’s margin. The difference between the two is a real cost.
Why an average uplift is dangerous
Add everything up, divide by the goods value, and you get one uplift for the whole shipment: say 16%. Apply that to every line and the valves are overpriced while the pumps are underpriced, because the real uplift on one was 12% and on the other 18%. The same container adds different amounts to different products. Price each from its own landed cost.