Cost analysis, a more complex process, is a thorough assessment of the fixed and variable costs leading to the final price of the product.
You need to have a good estimate of the landing cost before you make your order. Landing cost = cost of the goods fob + transport costs by forwarder + import duties (if any) + cost of our services (inspections, agents, etc.) + local transport costs. There are no hidden costs that are never discussed the way in advance. In costing we do not accept or expect assumptions.
Nothing I mean nothing except what has been discussed will be charged. Transparency is our goal.
Landed cost is an essential way to calculate your company’s bottom line by representing the total cost of a product on its journey from the factory floor to your buyer’s door.
It includes the price of goods, shipment costs, insurance fees, customs duties, and any other charges incurred along the way.
Not only is knowing how to calculate landed cost important, it is necessary to running a successful business.
There are obvious and hidden costs associated with getting any product to your customers. As such, the true cost of the products you sell may sometimes seem opaque.
But knowing your landed cost can bring clarity, allowing you to assess how your business is performing, maximize your pricing, and ensure that you know exactly how much you are paying for your inventory.
It also provides you the opportunity to analyze your supply chain and determine where it might be worth cutting costs.
This information enables you to calculate whether or not you will be able to make a profit on your products or even if your business model is sustainable.
But calculating landed cost can be difficult if you do not yet know your full expenses or lack the experience to anticipate how high the additional fees that often come up in shipping will be.
The key is to have the right set of tools to be able to anticipate and estimate a value that is as close to your actual costs as possible.
Figuring out your landed cost can be tricky.
Estimate too high and you may lose out on sales because of your pricing.
Estimate too low and your profits could suffer.
That is why it necessary to have the right tools.
Remember: your initial estimate is just that. An estimate. Our calculators are a great way to get a solid idea of your costs, but you should always perform another landed cost calculation once you have your final numbers.
This is the basic equation that you will be calculating:
Shipping + Customs + Risk + Overhead = Landed Cost
While marking up prices is one way to reduce your total landed costs, a landed cost analysis can help you uncover additional opportunities that could potentially make an even bigger impact — without putting the burden on your customers.
One of the most effective ways to use a landed cost analysis to reduce expenses is to audit your supply chain partners. Remember, the lowest price doesn’t always translate into the biggest profit.
Unexpected fees could raise your total landed cost. Price compare different manufacturers, suppliers, 3PLs, shippers, etc. and research the TRUE net landed cost to determine which is the best fit for your growing business. You could also try to negotiate better rates and package with your existing partners.
Length (cm) x Width (cm) x Height (cm) / 1,000,000
(Length x Width x Height in cm) / 5000 =
Volumetric Weight in kilograms
As mentioned, the net landed cost includes every expense you incurred in order to fulfill an order and get it into a customer’s hands. There are five main categories of your landed price:
The product is the most straightforward data point. This includes the unit price you paid to obtain the item from your supplier. The product price accounts for materials and components.
Shipping costs include crating, packing, handling, freight and transportation. You might have transportation fees for inland, ocean and air, depending on how you import and export your products.
Customs include both the import and export of your products. If you purchase from a foreign supplier, you’ll have import fees. If you sell to customers in different countries, you’ll have export-fees. Customs expenses include duties, taxes, tariffs, levies, Goods and Service Tax (GST), brokerage fees, harbour fees and other regulatory fees.
Risk includes whatever you’re paying to protect your business, products and customers. That means expenses for insurance, compliance and quality assurance. This also includes whatever you have invested in safety stock.
Overhead pertains to things like purchasing staff, due diligence, travel, exchange rates/currency conversion, payment processing fees, carrying costs, purchasing agency commissions, corporate income tax and bank charges.
It’s also important to be as accurate as possible, and leveraging technology automation can ensure that. If you calculate net landed cost to be too high, you could price customers out of purchasing your products. If you go too low, you could cut into your profits.
For us to give you an accurate quote Please sent us the following information:
You can also share Proforma invoice and packing list if you have.
Purchase price in USD x Exchange Rate ;[a]
Freight Charges (USD80 to 120 Per Cubic Meter by Sea/By air $3 to $12) ; [b]
Customs Duty on cost of goods [a+b] x % Tariff Rate = [c]
Commission : 5% on [a + b + c] = [d]
Applying Local Taxes CST/VAT (% as per tariff x d) = [e]
Local Transport from port till your warehouse; [f]
Total Amount payable in INR; [e + f]
Product A is Costing USD 20 ordered quantity is 100pcs; Total CBM (Cubic Meter) of the material is 2 M2. Customs Duty lets say is 15% the landing cost will be as follows:
Purchase price: 20 X INR 65 (Exchange rate taken as 1USD= INR 65) = INR 1300
Freight Charges for each product: 2 M2 / 100Pcs = 0.02 (CBM/Pc) X $100 = INR 130
Customs Duty : (1300+130) X 15% = INR 215
Commission : [1300+130+215] x 5% = INR 82
Landing cost: INR 1727
Local Taxes and transport as applicable will be taken at actual.