CIF vs landed cost: what each figure includes

Written by James F. Kollie, Jr. · Published 9 September 2026 · Reviewed 9 September 2026 · 7 min read

The short answer

CIF is the cost of the goods plus international freight plus marine insurance — the value of the consignment delivered to the destination port, before any government charge. Landed cost is CIF plus every charge required to get the goods out of the port and into your warehouse: customs duty, excise, levies, import VAT or GST, clearing, handling and inland delivery.

CIF is an input. Landed cost is the output you price from. Confusing them is the single most common reason an import that looked profitable on a spreadsheet loses money in practice.

What CIF includes

• The price actually paid or payable to the supplier for the goods.
• International transport to the destination port or airport.
• Insurance covering the goods for that international leg.

What CIF excludes

• Customs duty, excise and any government levy or processing fee.
• Import VAT or GST.
• Terminal handling, port storage, demurrage and delivery orders.
• Broker or clearing agent fees, documentation and inspection charges.
• Inland transport from the port to your premises.
• Bank charges, letter-of-credit costs and the spread on your currency conversion.
• Wastage, damage and units you will not be able to sell.

One nuance worth keeping straight: CIF is also an Incoterms delivery term describing who arranges and pays for freight and insurance. Even when you buy on FOB or EXW terms, most customs authorities still assess on a CIF-equivalent value, adding the freight and insurance you paid separately. The commercial term and the customs value are two different questions — our note on customs value vs invoice price and landed cost explains how the duty base is built and where it can differ from your invoice.

The formulas

CIF          = goods value + international freight + insurance
customs value = CIF  (some countries use goods only, or uplift CIF)
duty          = customs value x duty rate
tax base      = customs value + duty + any included levies
VAT / GST     = tax base x tax rate
landed cost   = CIF + duty + excise + levies + VAT/GST
                + clearing + handling + inland delivery
cost per unit = landed cost / sellable units

Worked example

A single-product shipment, using illustrative rates only — substitute the rates your destination actually applies.

Goods (invoice)                 20,000.00
International freight            2,400.00
Marine insurance                   180.00
--------------------------------------------
CIF                             22,580.00

Customs duty        @ 10% of CIF  2,258.00
Trade levy          @ 1% of CIF     225.80
Tax base = 22,580 + 2,258 + 226 25,063.80
Import VAT          @ 15%         3,759.57
Clearing agent, terminal, docs      950.00
Inland delivery                     420.00
--------------------------------------------
Total landed cost               29,929.37

Sellable units                       2,000
Landed cost per unit                 14.96

CIF is 22,580. Landed cost is 29,929 — about 33% more. An importer who priced from CIF and expected a 20% margin would in fact be selling below cost.

When to use each figure

• Use CIF when declaring value to customs, arranging insurance cover, comparing supplier quotes on a delivered-to-port basis, and as the starting point of the duty calculation.
• Use landed cost for pricing, margin and break-even analysis, stock valuation, deciding between suppliers whose freight profiles differ, and any go/no-go decision on a shipment.

Common traps

• Applying VAT to CIF alone. Most jurisdictions tax customs value plus duty plus certain levies. See how the import VAT and GST base is built.
• Forgetting that duty compounds into tax. A higher duty rate raises the tax base too, so the cash effect is larger than the duty itself.
• Treating recoverable VAT as free. Even where it is credited later, it is cash out of the business before the goods sell.
• Spreading shipment costs evenly. On a mixed container, freight and clearing must be allocated on a defensible basis — see allocating freight across multiple products.
• Dividing by units ordered, not units sellable. Breakage, samples and shrinkage belong in the denominator.

How we calculate and verify this

Every figure on this page is produced by the same calculation engine the free calculator and TrueCost Pro use, applied in the sequence set out in our calculation methodology. We publish no duty, excise, levy or tax rates of our own: rates, bases and exemptions are entered by you, and country presets are explanatory starting points that record where they came from and when they were last reviewed.

Results are estimates. This guide explains general method, not the law of any country. Confirm your tariff line, rate, tax base and exemptions with the destination customs authority or a licensed clearing agent before you commit to a purchase or a price. Nothing here is customs, tax or legal advice. If you find something wrong, tell us and we will correct it.