Import Duty & Landed Cost Calculator

How to calculate Landed Cost?

Landed Cost is the total price of a product once it has arrived at a buyer's doorstep. It encompasses the original price from the supplier, transportation costs, insurance, duties, taxes, and any other handling fees incurred during the shipping process.

Formula: Landed Cost = Product + Shipping + Insurance + Duty + Tax + Fees

Using the Landed Cost calculator: an example

A business imports 500 electronics units valued at $10,000 FOB (Free On Board), with a 5% duty rate and 20% VAT applicable at the destination.

Step-by-step calculation:

1. Calculate CIF: Sum the Product Value + Freight + Insurance.
2. Apply Duty Rate: Multiply the Duty percentage by the total CIF value.
3. Apply VAT: Apply the VAT percentage to the sum of (CIF + Duty).
4. Sum all costs: Add the CIF value, Duty, VAT, and any additional broker or processing fees.

Frequently Asked Questions

What is the difference between FOB and CIF?

FOB (Free On Board) indicates the price of the goods at the port of origin, meaning the buyer is responsible for shipping. CIF (Cost, Insurance, and Freight) includes the price of the goods plus the cost of shipping and insurance to the destination port.

Why is Landed Cost important for pricing?

Calculating the full Landed Cost prevents businesses from selling at a loss. By capturing hidden fees like customs duties and terminal handling charges, you can set a retail price that ensures a sustainable profit margin.

Does duty apply to shipping costs?

In many countries, customs duty is calculated based on the CIF value. This means that the duty percentage is applied to the combined total of the product value, insurance, and freight costs.