Landed cost is the true, all-in cost of getting one unit to your customer’s door. Price from the factory quote alone and you will quietly lose money on every sale. Here is how to calculate it properly.
The full landed-cost formula
Add every cost a unit absorbs on its journey, then divide by units. Most beginners forget the last three lines — and that is exactly where margin disappears.
- Product cost (factory price per unit)
- Inbound freight + insurance
- Duty, VAT and customs fees
- Marketplace commission + payment fees
- Returns, storage and packaging allowance
Worked example
A unit at $6 ex-works, $1.20 freight, $0.90 duty and 15% marketplace fee on a $19 sale lands near $9.95 before returns. Suddenly a “67% margin” is closer to 48% — still healthy, but only because you measured it.
Build it into pricing, not as an afterthought
Set a target net margin, calculate landed cost, then derive the minimum price. Re-check whenever freight rates or exchange rates move.
You do not have a price until you have a landed cost — everything before that is a guess.
Frequently asked questions
Should I include returns in landed cost?
Yes. Even a small return rate meaningfully changes net margin, so budget for it per unit.
How often should I recalculate?
Whenever freight, duty or FX shifts notably — at minimum once a quarter.
Work with Ambiance Export
Ambiance Export manages sourcing, marketplace operations, customs and worldwide logistics end to end — so you can focus on growth. Request a consultation and our team will reply within one business day with a tailored plan.
