What is the difference between FOB, CIF, EXW, and DDP pricing terms?

These are Incoterms (International Commercial Terms): EXW (Ex-Works) -- buyer is responsible from the factory; seller's obligation ends at the factory gate. FOB (Free on Board) -- seller is responsible until goods are loaded onto the vessel at the origin port. CIF (Cost, Insurance, Freight) -- seller is responsible until goods arrive at the destination port (includes freight and insurance). DDP (Delivered Duty Paid) -- seller is responsible for all costs including import duties, to the buyer's specified destination. DDP simplifies the buyer's logistics but typically at a higher price.

How do I find the duty rate for my product?

Use the US Harmonized Tariff Schedule (HTS), available at the CBP website (cbp.gov) or at HTS.usitc.gov. Search by product description to find the applicable HTS code and the associated duty rate. The general duty rate applies to most countries; additional rates apply for specific countries under trade agreements (USMCA for Canada/Mexico, etc.) or trade remedy tariffs (Section 301 for China, Section 232 for steel/aluminum). For classification questions, consult a licensed customs broker -- misclassification is a compliance risk.

What is an ISF (Importer Security Filing)?

The Importer Security Filing (ISF), also called '10+2,' is a US Customs requirement for all ocean freight imports. It must be filed at least 24 hours before cargo is loaded onto the vessel at the origin port. The ISF includes information about the importer, seller, manufacturer, country of origin, and HTS codes. Filing the ISF is typically handled by your customs broker. Failure to file or late filing can result in CBP liquidated damages of $5,000 per late ISF and may trigger cargo examinations.

How do Section 301 tariffs on Chinese goods affect landed cost?

Section 301 tariffs (imposed starting in 2018 and maintained and modified through 2026) add 7.5% to 25% (and higher on some categories) on top of the standard duty rate for goods imported from China. The tariff rate depends on the product's HTS code and which Section 301 list it appears on. These tariffs have significantly shifted sourcing decisions for many importers toward Vietnam, India, Mexico, and other alternative countries. Calculate the full duty burden (standard duty + applicable Section 301 tariff) when evaluating China-sourced products.

Small Business & Ecommerce

Product Landed Cost Calculator

Calculate per-unit landed cost from factory price, international freight, import duties, customs brokerage, insurance, inspection, and domestic drayage for importers.

Factory and Order

Factory Cost per Unit ($)

FOB or EXW price from supplier.

Total Units in Shipment

Shipping and Freight

International Freight ($)

Ocean, air, or express shipping total.

Cargo Insurance ($)

Typically 0.5% to 2% of cargo value.

Customs and Duties

Import Duty Rate (%)

HTS code duty rate. Check USITC.gov. 2026 rates may include Section 301 tariffs.

Customs Brokerage Fee ($)

Broker fee per entry. Typical: $150 to $400.

Other Costs

Quality Inspection ($)

Pre-shipment inspection (PSI). Typical: $250 to $500.

Domestic Freight / Drayage ($)

Port to warehouse delivery.

Target Retail Markup (%)

Markup over landed cost for suggested retail price. Typical: 100% to 300%.

Your Results

Enter shipment details to calculate landed cost.

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Introduction

The factory price a supplier quotes is not the price you actually pay for the product. Every product that travels from a supplier to your warehouse accumulates freight, insurance, customs duties, import fees, port handling, and domestic delivery costs that can add 15% to 40% on top of the ex-works price. Failing to calculate landed cost before setting pricing is one of the most common errors in product-based businesses -- and it is particularly common among sellers who source internationally for the first time. According to Customs and Border Protection (CBP), import duties are assessed on the transaction value of imported goods, and for many product categories, these duties can range from 0% to over 25% -- a range that makes landed cost highly product- and country-specific. This calculator builds the complete landed cost from supplier quote to your warehouse door, so your pricing, margin analysis, and inventory investment decisions are based on the true cost of ownership.

What This Calculator Does

This product landed cost calculator takes your ex-works (EXW) or FOB supplier price per unit, freight cost (sea, air, or ground), insurance, customs duty rate, import fees (customs brokerage, port handling, ISF filing, customs exam fees), and domestic delivery cost to produce the fully-landed cost per unit, landed cost as a percentage markup over supplier price, and the minimum selling price required to achieve any target margin at the landed cost.

The Formula

Landed Cost per Unit = (FOB Price + Freight + Insurance + Customs Duty + Import Fees + Domestic Delivery) / Units in Shipment | Duty Amount = (FOB Price × Duty Rate %)

The FOB (Free on Board) price includes the product cost and the supplier's cost to load goods onto the vessel at the origin port. From FOB, the buyer is responsible for ocean freight (or air freight), cargo insurance (typically 0.5% to 1.5% of shipment value), customs duty (assessed on transaction value, the duty rate determined by the Harmonized Tariff Schedule code), customs brokerage fees, port handling and terminal fees, ISF (Importer Security Filing) fee, and inland delivery to the warehouse. Each of these is divided by the number of units in the shipment to arrive at cost per unit.

Step-by-Step Example

Start with FOB price and unit count

A kitchenware importer orders 2,000 units of a silicone utensil set. Supplier FOB price: $5.80 per unit. Total FOB value: $11,600.

Calculate freight and insurance

Ocean freight (20-foot container, shared/LCL): $1,800 for the shipment. Insurance (0.8% of shipment value): $11,600 × 0.8% = $92.80. Per unit: ($1,800 + $92.80) / 2,000 = $0.946.

Calculate customs duty

HTS code for silicone kitchen utensils: duty rate 6.3% (verify at CBP.gov). Duty amount: $11,600 × 6.3% = $730.80. Per unit: $730.80 / 2,000 = $0.365.

Calculate all other import and delivery fees and compute landed cost

Customs brokerage fee: $280. ISF filing: $55. Port handling/terminal: $180. Chassis fee: $120. Inland delivery to warehouse: $340. Total other fees: $975. Per unit: $975 / 2,000 = $0.4875. Total landed cost per unit: $5.80 + $0.946 + $0.365 + $0.4875 = $7.60. Markup over FOB: ($7.60 - $5.80) / $5.80 = 31%.

Real-World Use Cases

Evaluating Air vs. Sea Freight for a New Product Launch

A brand needs 500 units urgently for a Q4 launch. Sea freight timeline: 35 days at $0.95/unit freight cost. Air freight timeline: 7 days at $8.20/unit freight cost. Sea landed cost: $12.40. Air landed cost: $19.65. The brand needs to launch now -- air freight is required. But the $7.25/unit premium on 500 units ($3,625 total) must be recovered from the first batch's margin. At a $49.99 retail price and 40% target margin, the minimum acceptable landed cost is $49.99 × (1 - 0.40) = $29.99. Both sea and air landed costs are well under this ceiling.

Comparing Two Suppliers in Different Countries

Supplier A (China): $4.10 FOB, 25% US tariff (Section 301), total landed cost $7.82 per unit. Supplier B (Vietnam): $5.40 FOB, 12.5% duty rate, total landed cost $8.05 per unit. China supplier appears cheaper on FOB price but is $0.23 more expensive on landed cost due to Section 301 tariffs. Vietnam supplier is the lower landed cost option. Without the landed cost calculation, the buyer would select China based on the lower quoted price.

Negotiating a Price Reduction with a Supplier

A buyer's full landed cost analysis shows the supplier's FOB price represents 76% of total landed cost. The buyer needs to reduce landed cost by $1.00 per unit to hit their margin target. They present the landed cost model to the supplier and negotiate a $0.85 FOB price reduction by agreeing to a 500-unit minimum order increase. The remaining $0.15 per unit gap is closed by switching from LCL to FCL shipping (full container load), which reduces per-unit freight cost by $0.22.

Comparison

Cost Component	Typical Range (% of FOB Value)	Notes
Ocean Freight (FCL)	5% - 12%	Full container load; rate varies by origin/destination and market conditions
Ocean Freight (LCL)	8% - 20%	Less-than-container load; higher per-unit cost for small shipments
Air Freight	40% - 80%	Fastest; only viable for high-value/low-weight products
Cargo Insurance	0.5% - 1.5%	Of total shipment value (CIF)
Customs Duty	0% - 25%+	HTS code specific; verify at cbp.gov/trade/search/tariff
Customs Brokerage	1% - 3% ($150-$400 flat)	Flat or % based on broker and shipment complexity
Port Handling / Terminal	1% - 3%	THC, chassis fees, port surcharges vary by port
Inland Delivery	2% - 6%	Drayage and trucking to warehouse

Common Mistakes to Avoid

Using the EXW (ex-works) price instead of FOB to calculate freight costs. EXW means the buyer is responsible for all costs from the factory gate, including inland transportation to the export port. FOB transfers responsibility at the origin port -- the point from which freight quotes are typically issued. Using EXW price without adding the supplier's inland freight to port will understate the actual cost base for importing.
Not researching the correct HTS code and duty rate before sourcing. The Harmonized Tariff Schedule code determines the duty rate, and product classification can significantly affect the rate. A slight product description difference can move a product between a 0% and a 15% duty rate. Verify the HTS code with your customs broker before committing to a sourcing decision, as misclassification creates both financial and legal risk.
Calculating duty on FOB value only when there are assists. An 'assist' in customs law is any material, tooling, dies, or design work provided to the supplier by the buyer that contributed to the production of the goods. Assists must be added to the transaction value for duty calculation purposes. Buyers who provide molds, packaging designs, or raw materials to suppliers and do not add their value to the duty base may be under-declaring transaction value -- a customs compliance violation.

Frequently Asked Questions

Accuracy and Disclaimer

Landed cost calculations are based on the freight, duty, and fee inputs provided. Actual customs duty rates depend on the correct HTS code classification, country of origin, and applicable trade agreements or trade remedy tariffs. Freight rates are market-based and subject to change. Customs fees and port charges vary by broker, port, and shipment specifics. Consult a licensed customs broker for import compliance guidance. Results are for planning purposes only.

Conclusion

Landed cost should be calculated before sourcing decisions are made, not after the first shipment arrives with unexpected fees. Request quotes from freight forwarders before signing purchase agreements, research your product's HTS code and duty rate on CBP's online tariff database, and build a cost model for each potential supplier. For businesses placing regular import orders, the Inventory Turnover Calculator helps optimize order frequency against the landed cost per unit. To understand how landed cost improvements affect overall business margins, use the Gross Margin Calculator to model the margin impact of each sourcing decision.

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