How to Use the Landed Cost Calculator
The MetricRig Landed Cost Calculator determines your true cost per unit for imported goods. Enter your product costs, shipping fees, duties, and handling charges to instantly see whether your margins are healthy or if you're selling at a loss. The calculation runs entirely in your browser—no sensitive business data is transmitted anywhere.
Enter Product Cost (FOB)
Input the Free On Board price—what you pay the manufacturer per unit at the factory gate. This is your base cost before any logistics or duties are applied. Include any supplier packaging or labeling costs that are quoted as part of the unit price.
Enter Freight and Shipping Costs
Input your total shipping cost (ocean FCL/LCL, air cargo, or freight forwarder quote) and the number of units in the shipment. The calculator will compute your per-unit freight cost automatically.
Enter Duty Rate
Input the combined duty percentage for your product based on its HS code and country of origin. Include both the base duty rate and any additional tariffs (Section 301, Section 232, etc.). Check the USITC HTS database or consult your customs broker for accurate rates.
Add Handling and 3PL Fees
Enter per-unit handling costs: warehouse receiving, pick-and-pack, prep for FBA, and any other fulfillment expenses. These often add $0.50-$2.00+ per unit and are frequently overlooked in margin calculations.
The calculator instantly shows your total landed cost per unit and compares it against your target sale price. If landed cost exceeds sale price, the margin indicator turns red—you're "underwater" and losing money on every sale. This early warning lets you adjust pricing, find alternative suppliers, or renegotiate terms before you commit to a large order.
Use the calculator to compare scenarios: What happens if tariffs increase by 10%? If you consolidate into larger containers? If you source from Vietnam instead of China? These what-if analyses help you make informed decisions before capital is committed.
What is Landed Cost?
Landed cost is the total price of a product when it arrives at your warehouse, ready to sell. It includes not just the purchase price (FOB cost), but also all the expenses incurred to get that product from the factory floor to your inventory shelf. These expenses include ocean or air freight, import duties and tariffs, cargo insurance, port handling fees, customs broker fees, drayage (local trucking from port), and warehousing or 3PL costs.
Understanding your true landed cost is critical because many businesses dramatically underestimate their actual cost of goods sold (COGS). They calculate margins based on factory price plus shipping, then discover at year-end audit that duties, handling, and hidden fees consumed all their profit—or worse, they were selling at a loss the entire time.
The problem is especially acute for e-commerce businesses sourcing from China. With Section 301 tariffs adding 25-30% to many product categories, plus Section 232 tariffs of 25-50% on steel and aluminum, a product with a 25% theoretical margin on paper might actually be underwater at a -5% actual margin once all costs are factored in.
Landed cost calculation is not optional—it's essential for profitability. Every serious importer, e-commerce seller, and supply chain professional needs to know their true landed cost before making pricing decisions, negotiating with suppliers, or committing to large purchase orders.
Components of Landed Cost
A complete landed cost calculation includes several distinct categories of expenses. Understanding each component helps you identify opportunities to reduce costs and improve margins.
Product Cost (FOB)
The Free On Board (FOB) price is what you pay the manufacturer per unit at the factory gate or when goods are loaded onto the ship. This is your base cost before any logistics or duties. Negotiating a lower FOB price is often the most impactful way to improve overall landed cost, but it's not the only lever.
Freight and Shipping
Freight costs include ocean container rates (FCL or LCL), air cargo if expedited, and multi-modal transport. Container rates fluctuate significantly based on demand, fuel prices, and route capacity. During the 2021-2022 supply chain crisis, container rates from China to the US peaked at $20,000+ per 40ft container; as of 2024-2025, rates have normalized to $2,000-$5,000 depending on route and season.
To calculate per-unit freight cost, divide total container/shipment cost by the number of units. This is why consolidating orders and maximizing container fill is so valuable—spreading a fixed shipping cost across more units reduces per-unit cost.
Import Duties and Tariffs
Import duties are taxes imposed by the destination country on imported goods. The rate depends on the product's Harmonized System (HS) code classification and country of origin. Base duty rates vary from 0% for many electronics to 18%+ for textiles and apparel.
As of 2025, additional tariffs apply to goods from certain countries:
- China: 30% additional (Section 301) on most goods, plus category-specific duties
- Steel/Aluminum: 25-50% (Section 232) regardless of origin
- Canada/Mexico: 25% on many categories under recent trade actions
- EU: 10-15% reciprocal tariffs on select categories
Duties are calculated as a percentage of the declared customs value (typically FOB price plus insurance plus freight to port).
Insurance
Cargo insurance protects against loss or damage during transit. Standard marine cargo insurance costs 0.3-0.5% of the shipment value for ocean freight. While optional, it's essential for high-value goods—a lost container with no insurance is a total write-off.
Handling and 3PL Fees
These per-unit costs include drayage (trucking from port to warehouse), warehouse receiving, storage, pick-and-pack for orders, and prep for FBA or other fulfillment channels. For e-commerce sellers, 3PL costs can add $0.50-$2.00+ per unit depending on product size and complexity.
Many sellers overlook 3PL fees when calculating landed cost because they pay these separately from the import invoice. But any expense incurred before the product is sold must be included in COGS. A product that costs $10 FOB with $2.50 in freight and $3.30 in duties might seem profitable at $18 sale price—until you add $1.50 in pick-pack fees and realize your true margin is under 5%.
The Margin Impact Reality Check
Underestimating landed cost is the most common reason e-commerce businesses fail to achieve profitability. A typical scenario: Seller sees a product for $8 FOB on Alibaba, plans to sell for $24.99 on Amazon, and expects a 60%+ margin. Reality after full landed cost: $8 product + $2 freight + $3 duty (37.5% for Chinese electronics) + $0.50 insurance + $1.50 3PL + $7.50 Amazon fees (30%) = $22.50 total cost. True margin: 10%.
This scenario plays out constantly. The seller launched expecting healthy profits, ran ads to drive sales, and discovered months later they were barely breaking even—or losing money. Calculating complete landed cost before committing to products or pricing prevents this expensive lesson.
The most successful importers run landed cost calculations before placing their first order. They know exactly what their margin will be at various price points, can negotiate effectively with suppliers, and make informed decisions about which products to pursue. Our calculator helps you join this group.
The 2025 Tariff Landscape
The US tariff environment has changed dramatically since 2018. The average effective tariff rate rose from 2.5% in early 2025 to an estimated 27% by April 2025 due to new trade actions. Understanding the current landscape is essential for accurate landed cost calculation.
Current Tariff Rates by Origin (2025)
- China: Base duty + 30% Section 301 (total often 33-48%)
- India: Base duty + 10% (total 13-28%)
- Mexico: Base duty + 25% (unless USMCA-exempt)
- Canada: Base duty + 25% (unless USMCA-exempt)
- EU: Base duty + 10-15%
- Other: Base duty + 10% global baseline
Many businesses are responding by diversifying supply chains away from China to Vietnam, Indonesia, India, and Mexico. While these countries may have lower tariff burdens, other costs (labor, quality control, lead times) must be factored in.
Supply chain diversification is not a silver bullet. Vietnam factories often source components from China, potentially triggering "substantial transformation" rules that still apply Chinese tariffs to the final product. India has longer lead times and different quality standards. Mexico offers proximity but higher labor costs. Each option requires a complete landed cost analysis to determine true savings, not just tariff rate comparisons.
The de minimis threshold ($800 for duty-free small packages) has also been suspended for many origins, meaning all imports now face applicable duties regardless of shipment value. This change particularly impacts dropshippers and businesses that previously avoided duties by shipping small packages directly to customers.
Tariff volatility is the new normal. Rates can change based on trade negotiations, elections, and geopolitical events. Smart importers build tariff scenarios into their landed cost calculations—modeling what happens if rates increase 10%, 20%, or more. This stress-testing helps identify products that are vulnerable to becoming unprofitable if tariffs rise, allowing proactive sourcing decisions before capital is at risk.
How to Calculate Landed Cost
The basic landed cost formula is straightforward:
Landed Cost = Product + Freight + Duty + Insurance + Handling
For a per-unit calculation:
- Product Cost/Unit: FOB price per unit
- Freight/Unit: Total shipping ÷ quantity
- Duty/Unit: (FOB × duty rate) ÷ quantity OR FOB × duty rate per unit
- Insurance/Unit: (Total value × insurance %) ÷ quantity
- Handling/Unit: Per-unit 3PL or handling fee
Example Calculation
Let's say you're importing 1,000 units of electronics from China at $10/unit:
- Product: $10.00/unit
- Freight: $2,500 container ÷ 1,000 = $2.50/unit
- Duty: (3% base + 30% Section 301) = 33% × $10 = $3.30/unit
- Insurance: 0.5% × $10 = $0.05/unit
- Handling: $0.50/unit
- Total Landed Cost: $16.35/unit
If your target sale price is $20.00, your actual margin is ($20.00 - $16.35) / $20.00 = 18.25%. That's significantly lower than the 50% margin you might calculate from FOB alone ($20 - $10 = $10 profit).
Strategies to Reduce Landed Cost
1. Diversify Sourcing
Moving production from China to Vietnam, India, or Indonesia can reduce combined duty rates by 20-30 percentage points. While unit costs may be similar or slightly higher, the tariff savings often more than compensate.
2. Consolidate Shipments
Ordering larger quantities spreads fixed shipping costs across more units. A $3,000 container shipping 500 units = $6/unit freight. The same container with 1,500 units = $2/unit freight. Maximize cube utilization.
3. Negotiate FOB Pricing
Volume commitments, multi-year contracts, and early payment terms can reduce FOB prices. A 5% reduction at the source cascades through the entire landed cost calculation.
4. Optimize 3PL Operations
Negotiate volume-based rates with your 3PL. Simplify packaging to reduce pick-pack time. Position inventory closer to major customer clusters to reduce outbound shipping.
5. Review HS Code Classification
Work with a licensed customs broker to ensure your products are classified under the most favorable HS codes. Some products can legitimately be classified under multiple codes with different duty rates.
HS code classification is both art and science. A product with electronic components might be classified as electronics (lower duty) or as an end-use item like toys or tools (potentially higher duty). First Sale valuation, if applicable, can reduce the customs value and thus the total duty paid. These strategies require professional guidance but can deliver substantial savings for high-volume importers.
Putting It All Together
The most effective landed cost reduction strategies combine multiple approaches. You might source from a lower-tariff country, negotiate better FOB pricing due to volume, consolidate shipments into full containers, work with an efficient 3PL, and ensure optimal HS code classification. Each element contributes percentage points to your margin improvement.
Run scenarios in our calculator to model the impact of each change. Start with the highest-impact lever for your situation (usually tariff reduction or FOB negotiation) and work down. Even small improvements—$0.25 per unit across 100,000 units—translate to $25,000 in annual profit improvement. Landed cost optimization is not a one-time exercise but an ongoing practice that separates profitable importers from those who struggle.
Frequently Asked Questions
What is the difference between FOB and landed cost?▼
FOB (Free On Board) is just the factory price—what you pay the manufacturer at their door. Landed cost adds all the expenses to get that product to your warehouse: freight, duties, insurance, and handling fees. FOB is the starting point; landed cost is the finish line that ultimately determines your true profit margin and competitive positioning.
How do I find the duty rate for my product?▼
Duty rates are determined by the product's Harmonized System (HS) code in the Harmonized Tariff Schedule (HTS). You can search the USITC HTS database or use tools like CBP's online duty calculator. For complex products, work with a licensed customs broker who can provide accurate classification.
What is "underwater" in landed cost analysis?▼
A product is "underwater" when its landed cost exceeds its sale price—meaning you're selling at a loss on every unit. This happens when hidden costs (especially duties and handling) erode what appeared to be a healthy margin based on FOB pricing alone. Our calculator highlights this with a red warning indicator. Underwater products should be immediately repriced, discontinued, or sourced from lower-cost alternatives. Every day you continue selling an underwater product, you're effectively paying customers to take your inventory.
Should I use DDP or DDU shipping terms?▼
DDP (Delivered Duty Paid) means the seller handles all costs including duties. DDU (Delivered Duty Unpaid) means you pay duties at destination. DDP is simpler but usually more expensive because the seller builds in a margin for risk and administrative overhead. DDU gives you more control but requires managing customs clearance yourself or hiring a broker. Most experienced importers prefer DDU for cost transparency and the ability to optimize duty payments through proper classification and valuation strategies.
How often do tariff rates change?▼
Tariff rates can change frequently based on trade policy decisions. Since 2018, US tariffs on Chinese goods have changed multiple times. It's essential to verify current rates before placing large orders. Sign up for CBP alerts or work with a broker who monitors changes for your product categories. Building tariff contingencies into your pricing model—for example, assuming rates could increase 10-15% without warning—helps protect margins against policy volatility. Our calculator lets you run these scenarios instantly to stress-test your product margins before committing capital.
Ready to Calculate Your True Landed Cost?
Use our free calculator to know your exact per-unit cost before you order. Stop discovering you're underwater after it's too late—run the numbers now and protect your margins.
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