Input unit cost and quantity to compute FOB value.
Provide total freight cost and insurance rate (typically 0.3-0.5%).
Look up your product's duty rate and your country's VAT rate.
Include brokerage, handling, and other fees if known.
See total cost, per-unit cost, markup, and detailed breakdown.
Customs authorities worldwide use CIF (Cost + Insurance + Freight) as the basis for duty calculation. VAT is then layered on top of CIF + duty. This 'tax on tax' structure is why high-VAT countries can dramatically inflate import costs even with modest duty rates. Brokerage and handling fees are added on top of all that. Knowing the breakdown lets you negotiate freight, choose smarter Incoterms, and shop tariff classifications.
CIF = FOB + Freight + Insurance • Duty = CIF × Duty% • VAT = (CIF + Duty) × VAT% • Total Landed = CIF + Duty + VAT + Fees
Insurance is typically 0.3-0.5% of (FOB + Freight) — cheap insurance for valuable cargo
Duty is calculated on CIF, not just product cost — freight inflates your duty bill
VAT is layered on top of CIF + duty — high-VAT countries can double your tax burden
VAT is usually recoverable for VAT-registered importers — toggle it off for true cost
Brokerage and handling fees often forgotten — add 1-3% of shipment value as a buffer
Tariff classification (HTS code) is the single biggest variable — get it right and verify
FTAs (free trade agreements) can drop duty to 0% if you can prove origin
Landed cost is the total price of a product once it arrives at your door, and it is almost always significantly higher than the factory invoice price. For importers, failing to account for every cost component is the fastest path to margin erosion. A typical international shipment incurs the FOB (Free on Board) product cost, ocean or air freight charges, cargo insurance (usually 0.3-1.5% of cargo value), customs duties (which vary from 0% to over 25% depending on the HS code and country of origin), VAT or import sales tax, customs brokerage fees, port handling charges, and last-mile delivery. Together, these can add 25-60% on top of the FOB price. Duties are calculated on the CIF value (Cost + Insurance + Freight), not the product cost alone, and VAT is then layered on top of CIF plus duty — creating a compounding effect that surprises first-time importers. Understanding each cost component as both an absolute dollar amount and a percentage of total landed cost is essential for accurate pricing, margin planning, and supplier negotiation. Businesses that track landed cost per unit can make better sourcing decisions and identify which cost levers offer the most savings.
Importers who price products based on supplier invoice alone routinely lose money on every sale. The supplier invoice is just the start — by the time freight, insurance, duty, VAT, and brokerage are added, the true cost can be 25-50% higher. Knowing your landed cost is the difference between profitable importing and slowly going broke. Always price your retail off landed cost, not FOB.
The single biggest variable in your duty bill is the tariff code (HS/HTS). Get it wrong and you might pay 25% when you should pay 5%, or vice versa. Codes can also unlock free-trade-agreement benefits — the same product imported from Mexico vs China can have wildly different duty rates under USMCA. Always have a customs broker verify your classification, especially for high-value or recurring shipments.
Data sourced from trusted institutions
All formulas verified against official standards.