Why Understanding Landed Costs Is Essential for Profitability
When sourcing products internationally—especially from China—knowing your landed cost is critical. Many importers focus only on the factory price, but that’s just the beginning. Your landed cost tells you the true total cost of getting a product from a foreign factory to your warehouse door.
At Global Trade Specialists, we help businesses navigate the complexities of importing from China, including calculating and reducing landed costs. In this post, we’ll explain what landed cost means, why it matters, and how to calculate it accurately.
What Is a Landed Cost?
Landed cost is the total cost of a product once it has “landed” at its final destination—typically your business or warehouse. It includes services such as the product cost, shipping costs, duties and tariffs, custom fees, and domestic transportation.
In short, the landed cost is the all-In cost to get the product to you.
Why Landed Cost Matters
If you’re only looking at the unit cost from the supplier (say, $1.00 per unit), you’re missing the full financial picture. That $1 item might actually cost you $1.35 after shipping, customs, and other charges.
The full cost of your product can be easily missed, especially if you are new to product sourcing.
Understanding landed cost helps you compare suppliers fairly. You may be getting several different quotes, and while some quotes may look better initially, they may end up being the worst deal, especially if there are prices you will have to pay that are not included.
Why Quotes aren’t always All-Inclusive?
You may be asking yourself, why don’t all suppliers just quote the full inclusive cost? It’s usually not because they are trying to hide the full cost to make their pricing look better.
Quoting the full cost takes time as it involves research into all the taxes and port fees included with shipping. These include things like bonds, tariffs, port unloading fees, drayage, and more, all depending on the weight, dimensions, and classification of your product.
Many suppliers and factories don’t want to go through all that hassle upfront, especially when many people that ask for quotes are not interested in or are not ready to buy, these include people who are price shopping between many suppliers to get the lowest price possible, new product developers who may have just a napkin sketch and want to know how much their product costs, or college students doing research projects.
Here is an example of fully calculated landing costs. Let’s say you import 10,000 USB chargers from China.
- Cost ItemAmount (USD)
- Product Price
($0.90 x 10,000 units)$9,000 - Ocean Freight$2,000
- Tariffs
(25%)$2,250 - Customs Brokerage & Fees$300
- Inland Trucking$500
Total Landed Cost = $14,050 → $1.405 per unit
So even though the unit price was $0.90, the actual cost per unit landed is $1.405—a 56% increase.
How Global Trade Specialists Helps
We don’t just source products—we help you reduce your landed cost by:
- Finding cost-efficient, reliable factories in China
- Optimizing freight routes and methods
- Consolidating shipments to reduce volume-based charges
- Ensuring proper HS code classification to avoid excess duties
- Providing accurate landed cost estimates before production begins
Don’t Leave Landed Cost to Guesswork
If you’re trying to scale your business, expand your product line, or improve margins, knowing your landed cost is a must. It ensures your pricing is sustainable—and your business, profitable.
Ready to Simplify Your Sourcing?
At Global Trade Specialists, we’ve been helping clients import from China for over 30 years. From product development to delivery, we’ll help you minimize risks and maximize profit. Contact us today to see how our team can impact your sourcing positively with our experience.