Landed cost is the combined cost of purchasing inventory and bringing it to the destination included in your calculation. Add the purchase cost, freight, insurance, applicable duties and tariffs, and brokerage or handling charges. Divide the total by the shipment quantity to estimate landed cost per unit.
How to Calculate Landed Cost per Unit
Use this guide alongside the interactive calculator above. It explains the calculation, the assumptions behind the result and the practical checks to make before using the estimate in a business decision.
Formula used by this calculator
Total landed cost = Purchase cost + Freight + Insurance + Duties and tariffs + Brokerage and handling. Landed cost per unit = Total landed cost ÷ Quantity.
Worked example
If a shipment costs $1,000 to purchase, with $180 freight, $20 insurance, $120 duties and $30 brokerage, total landed cost is $1,350. For 100 units, the estimate is $13.50 per unit.
Why supplier price is not the full inventory cost
The price on a supplier invoice may not represent what inventory costs by the time it reaches your warehouse or other chosen destination. International and domestic shipments can involve freight, insurance, customs duties, tariffs, brokerage and handling. Those charges can materially change the cost of each unit available for sale.
Landed cost gives a more complete starting point for inventory valuation and product pricing. It helps importers compare suppliers, assess shipment economics and avoid setting a retail price based only on the factory or wholesale price. The exact costs to include depend on the transaction, delivery terms, destination and accounting policy.
Understand the inputs
Purchase cost is the total amount paid for the goods in the shipment. Freight is the transportation charge to move the goods. Insurance is the amount paid to insure the shipment where applicable. Duties and tariffs are import charges that depend on the product classification, customs value, origin and destination rules. Brokerage and handling can include customs broker services and other shipment processing charges.
Enter the quantity of units represented by the shipment. The quantity should match the basis used for the purchase cost and other charges. If a shipment contains different products or sizes with materially different values or weights, a simple equal allocation may not be accurate; consider allocating shared costs using an appropriate method.
How to use the Fincelio Landed Cost Calculator
Enter the total purchase cost for the shipment, then enter the number of units. Add freight, insurance, duties and tariffs, and brokerage or handling. Use one currency for every amount. The calculator adds the cost inputs to produce total landed cost, divides that amount by quantity to estimate the per-unit cost, and displays the combined freight and import charges.
The tool does not determine customs classifications, duty rates, import eligibility or tax treatment. Use actual invoices and current information from your carrier, customs broker and relevant customs authority. If a charge is not applicable, enter zero rather than guessing.
A worked shipment example
Suppose a business orders 100 units for $1,000. Freight is $180, insurance is $20, duties and tariffs total $120, and brokerage and handling are $30. The shipment's total landed cost is $1,350. Dividing by 100 units gives $13.50 per unit.
The supplier price alone was $10 per unit, so relying only on that amount would understate the included acquisition cost by $3.50 per unit. If the business sells all 100 units, the total additional shipment charges add up to $350. This example is illustrative; real customs and freight charges should come from the shipment documents and applicable rules.
Allocation, currency and tax considerations
Shared shipment costs are not always best divided equally. Freight may be allocated by weight, volume, value or another method that reflects how the carrier charges. Duties may differ by tariff classification, and some shipments include products with different duty rates. Keep the allocation method documented and consistent with your accounting approach.
The Fincelio currency selector changes the display format only; it does not convert exchange rates. Convert source documents into one reporting currency using an appropriate recorded rate before entering values. Recoverable taxes may be treated differently from non-recoverable charges, so consult an accountant about inventory cost treatment in your jurisdiction.
Use landed cost to make better pricing decisions
Once you have a realistic landed unit cost, use it as an input to your pricing process. Add domestic storage, pick-and-pack, outbound shipping subsidies, marketplace commissions, payment processing, advertising and overhead where relevant. These may not be part of the landed cost definition used here, but they can affect the profitability of a sale.
Compare landed costs across suppliers and shipment sizes, but include lead times, quality, reliability, minimum order quantities and working-capital requirements. A lower unit purchase price may not produce a lower landed cost if freight or duties are higher. Pair this calculator with Fincelio's Product Cost, Selling Price and Profit Margin calculators.
Frequently asked questions
What is included in landed cost?
This calculator includes purchase cost, freight, insurance, duties and tariffs, and brokerage or handling charges.
How do I calculate landed cost per unit?
Add all included shipment costs, then divide the total by the number of units in the shipment.
Does landed cost include customs duty?
The calculator has a duties and tariffs input. The amount depends on product classification, origin, destination and current customs rules.
Should I include recoverable VAT or sales tax?
Tax treatment depends on your jurisdiction and accounting method. Ask an accountant whether a particular tax is part of inventory cost or recoverable.
Does landed cost include local warehousing?
Not as a separate input in this tool. Add later storage and fulfillment costs to your broader product-cost or profitability analysis where relevant.
Related Fincelio calculators
These calculations are educational estimates based on the values and assumptions entered. They do not replace accounting, tax, customs or legal advice. Verify important decisions against your business records and applicable professional guidance.