The number that decides whether an import is profitable is not the unit price you negotiated, and not the freight rate you were quoted. It is the landed cost: everything you pay to get one sellable unit onto your shelf.
It is also the number most importers calculate wrong — not because the arithmetic is hard, but because they stop too early. The usual version is “supplier price + freight + duty.” That is not landed cost. It is roughly two-thirds of it.
What Landed Cost Actually Includes
| Layer | What it covers |
|---|---|
| Goods cost | What you pay the supplier (typically FOB or FCA) |
| International freight | Ocean or air, to the destination port or airport |
| Cargo insurance | Cover for the transit |
| Duty and taxes | Customs duty plus any additional trade measures that apply |
| Destination charges | Terminal handling, documentation, chassis, per-diem — billed by the port and terminal, not the carrier |
| Customs brokerage | Entry filing, ISF, bond costs |
| Last-mile delivery | Port to your door, including accessorials |
| = Landed cost | The total. Divide by sellable units, not shipped units. |
That last distinction matters more than it looks. Landed cost is per sellable unit. If you ship 1,000 units and 40 arrive damaged or are held back as samples, your per-unit cost is calculated on 960 — not 1,000. Dividing by the shipped quantity quietly understates your cost on every order.
The Formula
Landed cost per unit =
(goods + freight + insurance + duty + destination charges
+ brokerage + last-mile) ÷ sellable unitsEverything on the left of the division sign is knowable before the goods arrive. Most of it is knowable before you even place the order — which is the point. A landed cost you can only calculate after the fact is not a decision tool.
The Five Lines People Leave Out
This is where the gap between a budget and an invoice actually comes from.
1. Destination port charges. Terminal handling, documentation fees, chassis usage, per-diem. These are billed by the terminal and the port, separately from the ocean freight the carrier quoted. On a container they are consistently one of the largest omitted lines.
2. The customs bond. Commercial entries need one. A continuous bond is an annual cost you maintain; a single-entry bond is bought per shipment. Per shipment, the single-entry option costs more — so importers who ship regularly and keep buying single-entry bonds are paying a premium for not having set one up.
3. Brokerage and ISF. Entry filing is one line. ISF — the Importer Security Filing, due before the cargo loads — is a separate filing with its own fee. Quotes that say “customs clearance included” do not necessarily cover both.
4. Demurrage and detention. This is a risk line, not a certainty. When it hits, it is charged by the day and compounds fast. It belongs in the budget at a low expected value, not at zero — the importers who get hurt are the ones who assumed it would never happen.
5. Delivery accessorials. Liftgate, inside delivery, residential delivery, appointment windows, limited-access locations. These are billed on top of the base delivery rate and are easy to miss because they depend on the receiving site, which is often not the buyer’s own dock.
Where Duty Fits — and Why It Moves Most
Duty is the line that has changed the most. For Chinese-origin goods it is a stack rather than a single rate: a base rate from the classification, plus additional measures that depend on the code and the origin.
That stack changed materially in 2026. It also means the duty line is the one most sensitive to a classification decision — which is why the classification is worth getting reviewed rather than guessed. The mechanics are covered in How to Calculate Import Duty from China to the USA.
Two Ways to Build the Number
You can assemble every line yourself, or you can buy the whole thing as one price under DDP. Both are legitimate. What matters is knowing what is inside the number.
| You assemble it (FOB/CIF plus your own costs) | One all-in price (DDP) | |
|---|---|---|
| Lines you see | Every one | Usually none |
| Setup work | Broker, bond, delivery arrangements | None |
| Cash flow | You pay each supplier of each service | One payment |
| Comparison against another quote | Possible, line by line | Difficult — you are comparing totals |
| Risk of an omitted line | Yours | The seller’s, contractually |
The trade-off is visibility against effort. Under DDP you are not the importer of record, so the classification and the declared value are decisions made by someone else — see Importer of Record: Who It Is and Why It Matters for what that does and does not transfer.
How to Compare Two Quotes Fairly
The most common mistake in quoting is comparing an FOB quote to a DDP quote. They are not the same scope, and the difference is usually larger than the margin you are trying to protect.
Before comparing, get both onto the same baseline:
- Same Incoterm. Convert both to the same term, or compare only the portions that overlap.
- Same destination. Port-to-port and door-to-door are different products.
- Same duty treatment. Is duty inside the price, or billed separately on arrival?
- Same exclusions. Ask each side to list what is not included. This is where the real differences show up.
A quote that looks 12% cheaper usually has one or two lines missing rather than a genuinely lower cost base. For the freight side of that comparison specifically, see How much it costs to ship from China to the USA.
Common Mistakes
Dividing by shipped units instead of sellable units. Covered above, and it compounds across every order.
Treating the freight rate as the cost. The ocean freight is one line; the destination side is several, and they are billed by different parties.
Budgeting demurrage at zero. Not budgeting for a risk is not the same as it not happening.
Comparing quotes with different scopes. The lowest number is often the one with the fewest lines in it.
Recomputing landed cost only when something goes wrong. The calculation belongs before the purchase order, not after the invoice.
Frequently Asked Questions
What is the difference between landed cost and product cost?
Product cost is what you pay the supplier. Landed cost is everything you pay before the goods are sellable at your location — freight, insurance, duty, destination charges, brokerage and delivery.
Does landed cost include duty?
Yes. Duty and any applicable trade measures are part of landed cost, and for many products they are the largest single variable line.
How do I calculate landed cost per unit?
Add every cost from the supplier’s price through to delivery at your location, then divide by the number of sellable units — not the number of units shipped.
Is DDP landed cost?
A DDP price is usually quoted as an all-in number, so it functions like a landed cost — but you are buying it rather than calculating it. The lines inside it are typically not visible to the buyer.
What is the most commonly forgotten landed cost item?
Destination-side charges: terminal handling, documentation, chassis and per-diem. They are billed by the terminal and port rather than the carrier, so they sit outside the freight quote.
Key Takeaways
Landed cost is the total cost to get one sellable unit into position — not the supplier price, and not the freight rate.
The formula is simple; the difficulty is completeness. The gap between a budget and an invoice is usually a destination-side line that was never in the calculation.
Calculate it before the purchase order, divide by sellable units, and put a non-zero number against the risks — demurrage, accessorials and the bond. If you would rather have one number than eight, our door-to-door delivery service sets out what is bundled and what stays outside.