Landed cost: a unit price becomes a cost, line by line

A unit price becomes a , line by line. The line moves more than your negotiation did.

Live result

The landed cost is $15.49 a unit, which is 23.9% above the price you negotiated.

Unit price$12.50
Quantity5,000
duty$0.88

The line that moves the total most is a classification decision more often than a negotiated price.

Shape the shipment

Live model

Try a scenario

Goods, EXW

EXW unit price

Shown in any single currency; the arithmetic is identical.

Quantityunits

Main leg

Main freight

Duty

Duty rate6.5%

The duty rate for your own classification, which varies by jurisdiction.

Import tax

Is the import tax recoverable to you

If you reclaim it, it is cash flow, not landed cost.

More detail

Journey costs and financial settings

14 inputs and the tax recovery lens

At origin

Export packaging for this transport

Packing changes when the agreed transport changes.

Inland freight to the port

Your quote for inland freight to the port.

Origin charges and export clearance

Main leg

Cargo insurance0.35% of goods value

Loss and damage allowance0.40% of goods value

Expected write-off as a share of the goods value.

Import tax

Import tax / VAT rate15%

At destination

Terminal handling at destination

Terminal handling on your side, unless it is already in the price.

Destination clearance and port charges

Storage and demurrage allowance

Forwarder and documentation fees

Money and time

Days your cash is out60days

Days the goods are moving34days

Annual cost of capital10%

Testing and certification, one-off

Amortised across the quantity above.

Recoverable tax still occupies cash

This timing lens uses your import tax, annual cost of capital and recovery time. It does not add the carry to landed cost.

Days until import tax is recovered60days

Cash occupied	$10,842
Carry cost	$178
Carry per unit	$0.04

Carrying $10,842 for 60 days at 10% costs $178. The tax itself remains outside landed cost because you marked it Recoverable.

Two moves, side by side

Price win

$0.68 a unit

Classification cost

$1.07 a unit

A 8-point move on the duty rate costs $1.07 a unit. Five percent off the price saves $0.68 a unit. The classification line moved 1.6× more than the negotiation did.

The two moves are worth the same at a 5.08-point difference in duty rate. Buyers spend weeks on the first move and minutes on the second.

Inspect the cascade

Follow a cost line

The largest additions change with the shipment. Choose one to trace the duty and import tax it creates. Its stage is outlined in the waterfall.

Trace the largest additions

Duty

Measure	Per unit
Line itself	$0.88
Duty created	$0.00
Import tax exposed	$0.13
Full landed effect	$0.88

This line exposes $662 of recoverable import tax. It occupies cash, but it stays outside the landed effect shown here.

Put the same five percent somewhere else

A percentage only works on the base it touches. The model recomputes every dependent line after the selected discount.

Discounted line

Measure	On this shipment
Amount touched	$62,500
Direct five percent	$3,125
Landed saving	$3,404
Landed saving per unit	$0.68

Five percent on the unit price saves $3,404 on this shipment, which is $0.68 a unit after the full model is recomputed. A further $0.06 a unit comes from insurance, duty and finance. This is the comparison base for the other two lines.

Test a goods only estimate

Quick estimates sometimes apply duty and import tax to the goods value alone. This compares that shortcut with the customs value basis used by this model. It does not determine the basis a customs authority will use.

Measure	On this shipment
Goods only base	$62,500.00
This model base	$67,868.75
Duty difference	$348.97
Import tax difference	$857.66
Landed difference	$348.97
Landed difference per unit	$0.07

Freight and insurance add $5,368.75 to the customs value used here. At your rates, that changes duty by $348.97 and import tax by $857.66. The tax difference affects cash exposure, while only the $348.97 duty difference enters landed cost.

From unit price to landed cost

15 lines · 7 stages

Measure	On this shipment
Money in the goods while they move	$582.19
The same money as a yearly rate	10%
Days it is out there	34 days

That figure is not in the cascade above, and adding it would count the same money twice. The payment terms line already prices your cash being out. This is the same cash, seen as goods on the water instead of as days on a clock.

Here is the maths

Model version: 1.0

The formula, in words

Goods value is unit price times quantity.
Duty is charged on a customs value, which on these terms is goods plus packaging, freight and insurance. That is why those lines quietly raise your duty bill.
Import tax is charged on the customs value plus the duty. It is a tax on a tax. If you can reclaim it, it is a cash-flow cost rather than a landed cost.
The cost of payment terms is the goods value carried at your annual cost of capital for the number of days your cash is out.
The pipeline figure carries the goods value at the same annual rate for the days the goods are moving. It is reported separately and is not added to landed cost.
One-off costs like testing and certification are divided by the quantity, so they land hard on a small order and vanish on a large one.
A traced freight or insurance line creates duty because it enters customs value. It also creates import tax on both the line and that duty. Recoverable tax is shown as cash exposure, but it is not added to the traced landed effect.
The discount comparison changes one selected input by five percent and then runs the whole model again. The difference between the direct cut and the landed saving comes from dependent lines that moved with it.
The tax recovery lens carries the computed import tax at your annual cost of capital for the recovery days you enter. That temporary carry is kept separate from landed cost.
The goods only comparison keeps every entered rate unchanged. It applies duty and import tax to goods alone, then compares that shortcut with the customs value basis used by this model.

V=G+K+F+I

where

V

is the customs value,

G

the goods,

K

the packaging cost,

F

the freight, and

I

the insurance.

D=V\times r_d

where

D

is the duty and

r_d

the duty rate.

T=(V+D)\times r_t

where

T

is the import tax and

r_t

the tax rate.

X=G\times r_x

where

X

is the damage cost and

r_x

the loss and damage rate.

C=\frac{G\times r\times d}{365}

where

C

is the finance cost,

r

the capital rate, and

d

the days.

P=\frac{G\times r\times d_t}{365}

where

P

is the pipeline capital cost and

d_t

the transit days.

\begin{aligned}L={}&G+K+F+I+X\\&+D+[T]+H+C+S\end{aligned}

where

L

is the landed cost,

H

the charges, and

S

the certification.

u=\frac{L}{q}

where

u

is the cost per unit and

q

the quantity.

D_i=v_i\times r_d

where

D_i

is the line duty and

v_i

the customs base part of the line.

T_i=(v_i+D_i+d_s)\times r_t

where

T_i

is the line tax and

d_s

the selected duty.

E_i=x_i+D_i+[T_i]

where

E_i

is the line effect and

x_i

the line amount. The bracketed tax enters when it is a cost.

L_\delta=\mathcal{L}(0.95x_i)

where

L_\delta

is the discount case and

\mathcal{L}

the full model result after changing the selected line amount.

C_r=\frac{T\times r\times d_r}{365}

where

C_r

is the recovery carry and

d_r

the recovery days.

V_g=G

where

V_g

is the goods only base.

D_g=G\times r_d

where

D_g

is the goods only duty.

T_g=(G+D_g)\times r_t

where

T_g

is the goods only tax.

\Delta L=\Delta D+[\Delta T]

where

\Delta L

is the basis landed gap,

\Delta D

the duty difference, and

\Delta T

the tax difference.

A worked example

The goods first: 5,000 units at $12.50, in dollars.

5{,}000 \times 12.50 = 62{,}500

The customs value is the goods plus what it took to get them to the border, insured: packaging $1,100, freight $4,050 (inland, origin charges and the main leg) and insurance at 0.35%.

62{,}500 + 1{,}100 + 4{,}050 + 218.75 = 67{,}868.75

Duty is charged on that value, at 6.5%.

67{,}868.75 \times 6.5\% = 4{,}411.47

Import tax at 15% is charged on the value plus the duty. It is reclaimable here, so it is shown but not counted.

(67{,}868.75 + 4{,}411.47) \times 15\% = 10{,}842.03

Damage at 0.4% adds $250 and destination costs add $2,080. Sixty days of cash at 10% on the goods has its own cost, and certification adds $1,800.

\frac{62{,}500 \times 10\% \times 60}{365} = 1{,}027.40

Everything that stays in the cost, added up:

\begin{aligned}L={}&62{,}500 + 1{,}100 + 4{,}050 + 218.75 + 250\\&+ 4{,}411.47 + 2{,}080 + 1{,}027.40 + 1{,}800 = 77{,}437.62\end{aligned}

Per unit, which is $15.49 and 23.9% above the price that was negotiated:

\frac{77{,}437.62}{5{,}000} = 15.49

Money in the goods for 34 moving days is reported separately and not added.

\frac{62{,}500 \times 10\% \times 34}{365} = 582.19

Five percent off the unit price produces a new landed total of $74,046.47, or $14.81 a unit, a saving of $0.6782 a unit. An eight point duty change adds $1.07 a unit. The two moves are worth the same at a 5.0789 point difference in duty rate. Money in the goods for 34 moving days is $582.19, reported separately and not added.

A goods only estimate starts its customs value at $62,500. This model adds $1,100 packaging, $4,050 freight and $218.75 insurance, so its customs value is $67,868.75. Duty is $4,062.50 on the shortcut and $4,411.47 here. Because tax is recoverable in this example, only the duty difference enters landed cost.

What this does not model

Currency movement between order and payment, preferential rates under a trade agreement, anti-dumping and countervailing duties, customs valuation adjustments (royalties, assists, tooling), quantity breaks, rebates, and the rounding conventions a particular authority applies. It also has no idea what your goods are: duty rate is an input on this page and nowhere in it is a classification suggested.

Shape the shipment

Journey costs and financial settings

Recoverable tax still occupies cash

Two moves, side by side

Inspect the cascade

Follow a cost line

Put the same five percent somewhere else

Test a goods only estimate

From unit price to landed cost

Here is the maths

The formula, in words

A worked example

What this does not model

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