Unit price is not the price. Build a true landed-cost model step by step.
Landed cost is the true, all-in cost of getting a product from the factory to your door. Unit price is only the first line of it — and often the smallest surprise.
The landed-cost formula
Landed cost = unit price + freight + insurance + customs duty + taxes + port and handling fees + inland transport + any brokerage or compliance costs, divided across the number of units.
Line items buyers forget
- Import duty and anti-dumping tariffs specific to the HS code.
- Port handling, demurrage and container fees.
- Customs brokerage and documentation charges.
- Currency conversion spread and payment fees.
- The cost of defects and returns at your quality level.
Why it changes the decision
A quote that is 10% cheaper per unit but ships from a port with higher freight and a worse duty rate can easily land more expensive. Model landed cost for every finalist before you compare — it routinely flips the ranking.
- List every cost line from factory to warehouse.
- Convert everything to one currency and one unit basis.
- Add a realistic defect and delay allowance.
- Compare finalists on landed cost per good unit.
Frequently asked questions
- What is landed cost?
- Landed cost is the total cost of a product once it reaches your warehouse, including unit price, freight, insurance, customs duty, taxes, handling and inland transport — divided across the units received.
- Why is landed cost more important than unit price?
- Because freight, duties and fees can add 20–40% or more to the unit price, and they vary by supplier and origin. The cheapest unit price often lands more expensive once everything is counted.
Ready to source smarter?