Landed cost is the true cost of an imported product once it reaches you. It is the only number that tells you whether a product is profitable. Here is how to calculate it.
The formula
Unit landed cost =
Unit FOB price
+ (Freight + THC + port charges) × line CBM share / total CBM
+ Insurance
+ Customs duties (base: CIF value × HS-code rate)
+ Import VAT
+ Clearance / inland transport × CBM share
+ Bank & FX fees
Then:
Margin = (Target sale price − Landed cost) / Target sale price
Allocation by CBM
Freight and fixed container costs are allocated pro rata to the volume (CBM) of each line. A bulky product "consumes" more container than a dense one, so it must carry a larger share of freight. That is the default method; you can also allocate by value.
A simple example
Take a lamp at 12 CNY FOB (≈ $1.65), 20 pieces per carton, 0.03 m³ carton:
- CBM per piece: 0.03 / 20 = 0.0015 m³
- Freight per CBM: say $240/m³ → $0.36 freight per piece
- Customs duties: 4% of CIF value
- Import VAT: depends on the country (e.g. 20% in France — always verify)
The landed price can end up 50–90% higher than the FOB price. Which is exactly why you should never decide on FOB alone.
Set it once, reuse it
Rates (duties by HS code, VAT, logistics costs by route) vary by product and country. Best practice: build a reusable cost library (route Shenzhen → your port, rates by HS code) and apply it automatically to every order.
Fairloop computes landed cost line by line on your container order, with CBM allocation and your own rates. See how.
Read also: the beginner's guide to China sourcing.