How Much Does It Really Cost to Import? Understanding Total Landed Cost
New importers frequently price a deal using only the supplier's quoted unit price — then get an unpleasant surprise when the real bill arrives. This guide breaks down every cost that makes up your true landed cost.
The core cost components
- Goods value — the price you pay the supplier, per your agreed Incoterm
- Freight — air or sea transport cost, which varies heavily by mode and route
- Insurance — typically 0.3%-0.5% of the insured cargo value
- Customs duty — a percentage of customs value, determined by your product's HS code
- VAT/import tax — usually applied on top of value plus duty
- Handling and clearance fees — port charges, customs broker fees, and inland trucking to your warehouse
Costs importers often forget
- Bank transfer and currency conversion fees
- Demurrage or detention charges if a container isn't cleared quickly
- Certificate or inspection fees for regulated products
A worked example
Importing $10,000 of goods (FOB) with $1,200 freight, $50 insurance, 8% duty, and 20% VAT:
- Customs value = $10,000 + $1,200 + $50 = $11,250
- Duty = $11,250 × 8% = $900
- VAT = ($11,250 + $900) × 20% = $2,430
- Total landed cost = $11,250 + $900 + $2,430 = $14,580 — 46% above the original goods price
Frequently asked questions
Does the Incoterm change my total cost?
It changes which costs are already included in the supplier's price versus which you pay separately — the total ends up similar, but an EXW price looks deceptively low compared to a DDP price.
How can I reduce my landed cost?
Check whether a free trade agreement reduces your duty rate, consolidate shipments to spread fixed costs, and compare LCL versus FCL freight pricing for your volume.
Related tools and reading
Conclusion
Never price a deal on the goods cost alone — the gap between the quoted price and the true landed cost is where import budgets go wrong most often.
Get the real number before you commit: Calculate your landed cost →
Last updated: July 25, 2026