What Is Landed Cost and How to Calculate It

QuotaHack

May 20, 2026

What is landed cost and how to calculate it — importers guide

Landed cost is the total cost of bringing a product from its origin to your door — or to your customer's door. It includes not just the purchase price but every cost incurred along the supply chain: freight, duties, storage, handling, insurance, and more.

For B2B sales reps, importers, and pricing managers, landed cost is the true baseline for any profitable price. Markup or margin applied to the purchase price alone is one of the most common — and costly — pricing mistakes in B2B commerce. Unsure about the difference between margin and markup? Read our explainer on margin vs markup before setting your pricing floor.

The Complete Landed Cost Formula

Landed Cost = Purchase Price + Inbound Freight + Import Duties + Insurance + Storage + Handling + One-Time Costs

Purchase Price (Net)

Start with your gross purchase price and subtract any cash discount. If you buy at $100 EXW with a 2% cash discount, your net purchase price is $98.

Inbound Freight

Freight is typically quoted per pallet, per CBM (cubic meter), or per kg. To get per-unit freight cost: divide the per-pallet rate by the number of units per pallet. Remember to include origin charges (THC, document fees) and surcharges (BAF, CAF) if applicable.

Import Duties and Taxes

Import duties are typically a percentage of the customs value (usually CIF — cost, insurance, freight). Your freight forwarder or customs broker can confirm the HS code and duty rate. Duties are often the largest invisible cost for new importers.

Insurance

Cargo insurance is typically 0.1%–0.5% of the insured value. Under CIP Incoterms, the seller provides all-risk insurance. Under other terms, you need to arrange your own. Don't skip this — an uninsured shipment loss can wipe out months of margin.

Storage

Storage cost depends on dwell time in a warehouse and the daily rate per pallet. Formula: Storage per unit = (Storage days × Daily rate per pallet) ÷ Units per pallet.

Handling and Loading

Loading at origin, unloading at destination, pallet exchange fees, and inland transport fees all count toward landed cost. These are easy to forget but add up quickly on high-volume orders.

One-Time Costs

Tooling, mould costs, setup fees, and artwork charges are one-time investments that need to be amortized across the order quantity. A $2,000 tooling cost spread over 500 units adds $4 to your per-unit landed cost.

Landed Cost Calculation Example

Gross purchase price EXW: $60.00
Cash discount (2%): −$1.20
Sea freight (€350/pallet, 150 units/pallet): $2.54
Import duties (8.5% of CIF value): $5.36
Cargo insurance (0.25%): $0.16
Storage (10 days × €3.50/day / 150 units): $0.25
Loading/handling at origin: $0.40
Tooling amortized ($3,000 / 1,000 units): $3.00
Total Landed Cost Per Unit: $70.51

Notice that the purchase price ($60) is 85% of the landed cost ($70.51). If you applied a 30% margin to $60, you'd price at $85.71. Applied to the true landed cost of $70.51, the same 30% margin gives $100.73. The $15 difference is pure margin erosion — invisible until you look at your P&L.

Landed Cost vs. Total Cost of Ownership

Landed cost covers the supply chain from origin to arrival. Total cost of ownership (TCO) goes further — it includes internal processing, quality control, returns, warranty, and end-of-life costs. For pricing purposes, landed cost is the right baseline. TCO is a strategic procurement tool.

How Incoterms Affect Landed Cost

Your landed cost calculation changes completely based on the Incoterm. Under EXW, you pay for everything. Under DDP, the seller pays everything and rolls costs (plus their risk premium) into the price. Under FOB, you own freight and duties; under DAP, the seller pays freight but you pay duties. For a full breakdown of each term and what it means for your cost base, see our guide to Incoterms 2020 explained for importers.

From Landed Cost to Selling Price

Once you have your landed cost, the next step is applying your pricing logic. You can use either a markup percentage or a target margin — but the two are not interchangeable. See margin vs markup explained to understand which to use and when. For the full per-unit pricing workflow, including a worked example with Incoterms, read our guide on how to calculate selling price per unit.

Automate Landed Cost Calculations

The QuotaHack B2B Pricing Calculator was built to handle exactly this complexity. Input your purchase price, select your Incoterm, enter freight rates (or use the built-in CBM calculator), add duties, storage, and one-time costs — and get an instant landed cost plus sell price.

→ Start your free trial — calculate your true landed cost instantly across any Incoterm.

Key Takeaways

Landed cost = every cost from origin to delivery, not just purchase price
Always include freight, duties, insurance, storage, handling, and amortized one-time costs
The gap between purchase price and landed cost is typically 10%–40% depending on trade lane and product
Pricing on purchase price instead of landed cost is the #1 source of margin erosion in B2B importing
Your Incoterm determines which costs belong in your landed cost calculation