When teams budget for imported goods, they often anchor on the unit price quoted by a supplier. But the number that actually hits your margin is the landed cost — the total expense of getting a product from the factory floor to your warehouse door, ready to sell.
The Components of Landed Cost
Landed cost rolls up far more than the purchase price. It includes ocean or air freight, customs duties and tariffs, brokerage and clearance fees, cargo insurance, port and terminal handling charges, and inland transportation to your final facility. Currency fluctuations and demurrage can quietly inflate the total as well.
Each of these line items behaves differently. Freight rates swing with capacity and fuel; duties depend on HS classification and country of origin; handling fees vary by port. Treating them as a single fixed percentage of product cost is where most forecasting errors begin.
A disciplined landed-cost model assigns each charge to the SKU or shipment it belongs to, so you can see true profitability product by product rather than averaging your exposure across an entire order.
Once landed cost is visible at the SKU level, sourcing and pricing decisions sharpen. A product that looked profitable on unit price alone can turn out to be a margin drain once duties and last-mile handling are folded in — and a smarter supplier or routing choice often recovers the difference.