How to Calculate Landed Cost of Imported Goods: Formula, Examples & Excel

Landed cost is the total cost of getting imported goods to your warehouse or named place: product cost plus freight, insurance, import duty and destination fees. Divided by the number of units, it gives the per-unit cost your margin actually depends on — not the supplier's invoice price. Here's the formula, what belongs in each line, how FOB, CFR and CIF prices fit in, two worked examples, the landed cost factor, and a spreadsheet layout with the exact formulas. Want the number without the setup? Use the free landed cost calculator.

The Formula

Landed cost = product cost + freight + insurance + duties + other fees. Divide by quantity to get a per-unit landed cost — the number that actually determines your margin, not the supplier's unit price. If you buy in one currency and sell in another, convert consistently at one rate before you compare margins.

Per shipment: Total landed cost = product cost + freight + insurance + duties + other fees
Per unit: Landed cost per unit = total landed cost ÷ units received

What Is Included in the Landed Cost

• Product cost — the supplier's invoice amount, converted to your base currency at a consistent rate.
• Freight — ocean, air, or road freight to the named place, including any fuel or peak-season surcharges.
• Insurance — cargo insurance premium, if you're covering it rather than the seller.
• Duties — import duty, calculated as a percentage of a customs (usually CIF) value; the rate depends on the HS code.
• Other fees — customs clearance, port or terminal handling, inland haulage, documentation fees, and any broker charges.

FOB, CFR (C&F) and CIF vs Landed Cost

Supplier quotes usually come as FOB, CFR (also written C&F or CNF) or CIF. Each is a step on the way to landed cost, and each one adds a cost to the one before it:

• FOB value = ex-works price + export packing + inland transport to the port + export clearance + loading at the origin port. It's the price of the goods on board the ship.
• CFR / C&F value = FOB + main freight to the destination port.
• CIF value = CFR + marine insurance. Under Incoterms® 2020 CIF, the seller must insure for at least 110% of the contract value.
• Landed cost = CIF + import duty + non-recoverable import taxes + destination port and clearance charges + delivery to your warehouse.

To convert a CIF quote to FOB, work backwards: FOB = CIF − freight − insurance. Ask the supplier for the freight and insurance amounts, which should be shown separately on a CIF invoice. That lets you compare a CIF quote with an FOB quote on the same basis. Whatever the quote, the difference between FOB and landed cost is everything you pay after the goods leave the origin port, and it varies with the route, duty rate and shipment size. See FOB vs CIF for which documents each term needs, and Incoterms 2020 explained for the other rules.

CBM and How Sea Freight Is Charged

1 CBM is one cubic metre: a space 1 m × 1 m × 1 m, about 35.3 cubic feet. To find a shipment's CBM, multiply each carton's length × width × height in metres and then by the number of cartons. LCL (shared-container) freight is usually priced per 'weight or measure': the carrier charges on the greater of the CBM or the weight in metric tonnes (1,000 kg counts as 1 CBM). Full containers are priced per container. Getting CBM right on the packing list is what keeps the freight line of your landed cost accurate.

Worked Example 1: 500 units

Product cost (500 units × $10): $5,000
Freight: $450
Insurance: $60
Duty (8% of product + freight): $436
Clearance & handling: $150
Total landed cost: $6,096
Landed cost per unit: $12.19

That per-unit figure — not the $10 supplier price — is the number to compare against your selling price.

Worked Example 2: 1,000 units

Product cost (1,000 units × $4): $4,000
Freight: $600
Insurance: $40
Duty (12% of product + freight): $552
Clearance, handling & haulage: $180
Total landed cost: $5,372
Landed cost per unit: $5.37

The Landed Cost Factor

The landed cost factor is total landed cost divided by product cost. In Example 1 it's $6,096 ÷ $5,000 = 1.22; in Example 2 it's $5,372 ÷ $4,000 = 1.34. Importers who buy the same kind of goods on the same route use the factor as a quick estimate: multiply a new supplier price by 1.22 and you have a working landed cost before the freight quote arrives. Recalculate it whenever freight rates, duty or the exchange rate move, because a stale factor is how margins quietly erode.

Allocating Landed Cost Across Several Products

When one shipment carries several SKUs, spread the shared costs (freight, insurance, clearance) across them before working out per-unit figures. Allocate by value for duty and insurance, which are charged on value, and by weight or volume for freight on heavy or bulky goods. Whatever basis you choose, apply it the same way every time so margins stay comparable between shipments.

What the Duty Is Calculated On

Duties are often calculated as a percentage of a customs value that includes product and freight, and sometimes insurance — usually called the CIF value. Some countries use FOB value instead. The examples above use product + freight as a simple working base. Confirm the exact basis, HS code and applicable rate with your broker; they vary by country and product.

Landed Cost Formula in Excel

Put one shipment (or one SKU) per row with these columns: A Item, B Quantity, C Product Cost, D Freight, E Insurance, F Duty %, G Fees. Then add:

• Duty amount (H): =(C2+D2+E2)*F2, or drop E2 if your country uses product + freight as the base.
• Total landed cost (I): =C2+D2+E2+H2+G2
• Landed cost per unit (J): =I2/B2
• Landed cost factor (K): =I2/C2

Keep one row per shipment or per SKU, so the sheet doubles as a running record, and keep the exchange rate in its own cell so every row converts at the same rate.

When a Spreadsheet Isn't Enough

A spreadsheet works fine for one or two shipments a month. It gets error-prone once you're tracking multiple SKUs, currencies, or suppliers — formulas break, someone overwrites a cell, and last quarter's rate stays hardcoded. Our free landed-cost calculator handles the per-unit math without that risk; calculator vs Excel compares the two approaches.

Frequently Asked Questions

How do you calculate the landed cost of imported goods?

Add product cost, freight, insurance, duties, and other fees like clearance and handling: landed cost = product cost + freight + insurance + duties + other fees. Divide by units shipped to get a per-unit landed cost you can compare against your selling price.

What is included in the landed cost?

Product cost, international freight, insurance, import duty (usually a percentage of the customs or CIF value), and destination-side fees such as customs clearance, handling, and inland haulage to your warehouse.

What is FOB vs landed cost?

FOB is the price of the goods loaded on the ship at the origin port. Landed cost adds everything after that: freight, insurance, import duty and taxes, destination charges and delivery. Landed cost is always higher than FOB, and it's the figure your margin depends on.

What is FOB, CNF and CIF?

FOB (Free On Board) is the goods' price loaded at the origin port. CNF, also written C&F or CFR (Cost and Freight), is FOB plus freight to the destination port. CIF (Cost, Insurance and Freight) is CFR plus marine insurance.

How do you convert CIF to FOB?

Subtract the freight and insurance: FOB = CIF − freight − insurance. A CIF invoice should show both separately; if it doesn't, ask the supplier for them.

What is 1 CBM in sea freight?

One cubic metre (1 m × 1 m × 1 m), about 35.3 cubic feet. LCL freight is charged on the greater of CBM or weight in tonnes, with 1,000 kg treated as 1 CBM.

How do you calculate landed cost per unit?

Divide the total landed cost of the shipment by the number of units received. In the 500-unit example above, $6,096 ÷ 500 = $12.19 per unit.

What is a landed cost factor?

Total landed cost divided by product cost, for example 1.22. Multiply a supplier price by it for a quick landed cost estimate on a familiar route, and recalculate it when freight, duty or exchange rates change.

Should overheads be included in landed cost?

Usually not. Landed cost covers the costs of getting goods to your door. Warehouse rent, salaries and marketing are operating overheads you recover in your margin. Some businesses add a fixed handling percentage. If you do, apply it consistently.

Is GST or VAT part of landed cost?

Import GST or VAT is paid at clearance, but if you can reclaim it as input tax credit, leave it out of landed cost for margin purposes. Include it only if you can't recover it.

Estimate only — confirm HS classification, duty rate, and valuation basis with your customs broker before relying on any landed-cost figure for pricing.