How to calculate landed cost

Ten steps, in order

1. Establish the goods value. The price you actually pay the supplier, in the currency you pay it, converted at the rate your bank gives you — not the mid-market rate.
2. Add international freight and insurance. Goods value + freight + insurance = CIF. Even where your terms of sale differ, most customs authorities work from a CIF-equivalent value.
3. Determine the customs value. Usually CIF. Some countries value on goods alone (the United States), and some uplift the value for tax purposes (South Africa).
4. Calculate customs duty. Customs value × the duty rate for your specific tariff line. Confirm the line, the rate, and any preferential origin or exemption.
5. Add excise and specific levies. Each rule is separate: a percentage of a base, a specific amount per item, kilogram, ton, litre or gallon, or a fixed amount — with any minimum or maximum applied.
6. Build the tax base. Import VAT or GST is charged on a defined base, commonly customs value + duty + certain levies. Get this base right; it is where most costings break.
7. Calculate import VAT or GST. Tax rate × the tax base. Recoverable or not, it is cash out before the goods sell.
8. Add clearing and delivery. Broker fee, terminal and port handling, documentation, inspection, cargo tracking, bank charges, storage, demurrage and inland transport.
9. Total and divide. Total landed cost ÷ sellable units = landed cost per unit. This is the number your pricing must be built on.
10. Price and check. Profit per unit = selling price − landed cost per unit − selling cost per unit. Margin = profit ÷ selling price. Markup = profit ÷ landed cost.

The formulas

CIF                = goods + freight + insurance
customs value      = CIF (or goods only, or CIF x uplift)
duty               = customs value x duty rate
excise / levy      = base x rate            (percentage)
                   = quantity x amount      (specific)
                   = amount                 (fixed)
                     clamped to any minimum and maximum
tax base           = customs value + duty + included levies
VAT / GST          = tax base x tax rate
landed cost        = CIF + duty + excise + levies + tax + clearing + delivery
cost per unit      = landed cost / sellable units
profit per unit    = price - cost per unit - selling cost per unit
margin             = profit per unit / price
markup             = profit per unit / cost per unit
break-even price   = cost per unit + selling cost per unit
target price       = (cost per unit + selling cost per unit) / (1 - target margin)

Allocating shared costs across products

A container rarely holds one product. Freight, insurance, broker fees and trucking are shipment costs that must be split across products before per-unit cost means anything. Choose a basis and apply it consistently:

• By purchase value — the default, and the closest match to how duty and tax behave.
• By quantity — sensible when items are similar in size and value.
• By weight — right for heavy goods where freight is weight-driven.
• By volume — right for bulky, light goods that fill the container.

TrueCost Pro applies your chosen basis to every shared cost and shows each product's share, so you can see exactly what has been loaded onto it.

Reconcile afterwards

An estimate is only useful if you check it. When the shipment clears, enter the actual invoice and customs assessment figures and compare. Two or three reconciled shipments will teach you more about your real cost structure than any template.

What never to do

• Never infer a duty rate from a six-digit HS code alone.
• Never apply VAT to the invoice value in a country that uplifts or includes duty.
• Never leave storage, demurrage or bank charges out because they are "small".
• Never price from margin on cost when you meant margin on price. They differ.