Landed cost is the full cost of getting one unit from a Chinese factory into your warehouse: purchase price, freight, insurance, customs duty, fees and any non-recoverable taxes, divided by the number of units. Calculating it before you order is the only reliable way to set prices and check your margin, because the factory quote is often only 50-80 percent of the real cost.
Key takeaways
- Landed cost = product cost + freight + insurance + customs duty + non-recoverable taxes + fees + inland delivery.
- Customs duty in the EU is calculated on the CIF value, so freight and insurance increase the duty you pay.
- For VAT-registered businesses that recover import VAT (in France via autoliquidation on the CA3), VAT is not a cost and should not be included.
- Since 1 July 2026, low-value B2C parcels pay a 3 euro flat duty per item category in the EU, which can strongly affect dropshipping and single-parcel models.
- Allocate shared costs (freight, fees) per unit by volume or weight, not just by count, when an order mixes different products.
- Build in a contingency of about 5-10 percent for currency moves, freight rate changes and unexpected fees.
Total landed cost = product cost + origin costs + international freight + insurance + customs duty + other duties + destination fees + inland delivery + other costs
Landed cost per unit = total landed cost / number of units
Depending on the Incoterm, some of these costs are already in the supplier's price. Under FOB, origin costs are included; under EXW they are not; under DDP everything should be included, but VAT recovery may be lost. See Incoterms explained to know where to start.
Which costs should you include?
| Cost category | Examples | Typical range or rule |
|---|
| Product cost | Unit price x quantity, tooling, packaging, labels | As per proforma invoice |
| Payment costs | Bank fees, FX margin, payment platform fees | Often 1-3 percent of order value |
| Origin costs | Trucking to port, export clearance, terminal handling | Included in FOB; extra if EXW |
| International freight | Sea, rail, air or courier | From a few percent to over 20 percent of value |
| Insurance | Cargo all-risks policy | Often around 0.2-0.5 percent of CIF x 110 percent |
| Customs duty | TARIC rate x CIF value | 0-12 percent for most goods, more for some |
| Anti-dumping duties | Product- and company-specific | Can exceed 50 percent |
| Destination fees | Terminal handling, documentation, delivery order | Hundreds of euros per container |
| Customs broker | Declaration, extra HS lines, certificates | Around 50-150 euros per declaration |
| Inland delivery | Truck to your warehouse or 3PL / Amazon FBA | Depends on distance and pallets |
| Quality and compliance | Samples, inspection, lab tests, certification | Inspection about 250-400 euros per day |
| Other | Storage, demurrage, relabelling, returns allowance | Case by case |
The VAT question is binary. If your company is VAT-registered in France and fully taxable, import VAT is self-assessed and deducted on the same CA3 return, so it is excluded. If you cannot recover it, add it, calculated as 20 percent (standard rate) of CIF value plus duty plus transport to first destination. Details are in import duties and VAT from China to France.
Step-by-step: calculating landed cost
- Get the supplier's price and Incoterm. Note the currency (USD or CNY) and convert at a realistic rate plus your bank's margin.
- Get the packing list data. Number of cartons, gross weight and cubic metres determine freight cost.
- Request freight quotes on the same Incoterm and delivery address from two or three forwarders, including all destination charges.
- Find the duty rate from the 10-digit TARIC code with China as origin, including any anti-dumping duty. If you are unsure of the code, read HS codes explained.
- Calculate the CIF value: goods value plus freight and insurance to the EU border.
- Calculate duty: CIF value x duty rate.
- Add fees and delivery: port charges, broker fees, trucking to your warehouse.
- Add quality, compliance and payment costs spread over the order.
- Add VAT only if non-recoverable.
- Divide by the number of units and add a 5-10 percent contingency.
Worked example: 2,000 LED desk lamps by sea
A French e-commerce seller buys 2,000 LED desk lamps at 6.50 USD FOB Shenzhen. Assumptions (illustrative, check your own TARIC code and quotes):
| Item | Calculation | Amount (EUR) |
|---|
| Product cost | 13,000 USD at about 0.86 EUR per USD | 11,180 |
| Bank and FX costs | About 1.5 percent | 168 |
| Sea freight LCL, 8 m3, Shenzhen to Le Havre | Forwarder quote | 900 |
| Insurance | 0.3 percent x 110 percent of goods plus freight | 40 |
| CIF value | 11,180 + 900 + 40 | 12,120 |
| Customs duty at an assumed 3.7 percent | 12,120 x 3.7 percent | 448 |
| Destination charges and broker fee | Quote | 420 |
| Delivery to warehouse near Lyon | 3 pallets | 260 |
| Pre-shipment inspection | 1 day | 300 |
| Lab test and compliance documentation review | Shared over first order | 600 |
| Total landed cost | | 14,316 |
| Landed cost per unit | 14,316 / 2,000 | about 7.16 |
The factory price was about 5.59 euros per unit; the landed cost is about 7.16 euros, or roughly 28 percent more. Import VAT (about 20 percent of 12,120 + 448 + 680) is self-assessed and deducted on the CA3, so it is not included.
Add a 5-10 percent contingency and you get a planning figure of about 7.50-7.90 euros per lamp. If you sell on Amazon at 29.90 euros including VAT, you can now deduct VAT, Amazon referral and FBA fees and advertising to see your real margin.
What if you shipped by air?
At 8 m3 the chargeable weight by air would be about 1,330 kg (8,000,000 cubic cm divided by 6,000). At air rates that can easily reach several euros per kilogram, freight alone could add 2-4 euros per lamp, which would erase much of the margin. Our sea vs air vs rail freight comparison explains how to choose.
How to allocate shared costs across products
When one shipment contains several products, allocate costs sensibly:
- Freight: by volume (m3) for sea and rail, by chargeable weight for air.
- Duty: calculated per product line, since rates differ by HS code.
- Fixed fees (broker, documentation): by value or equally per unit.
- Inspection and testing: to the product concerned.
A simple spreadsheet with one row per SKU and columns for quantity, unit price, volume, weight and duty rate is enough for most SMEs.
Landed cost for small parcels after the 2026 changes
If you ship individual orders directly from China to EU consumers, the July 2026 changes alter the calculation:
- The 150 euro duty exemption no longer applies; a temporary flat 3 euro duty per item category is due on each low-value parcel sold to a consumer.
- The EU handling fee of 2 euros per item, adopted by the Commission, is expected to apply from 1 November 2026 to distance sales.
- VAT is collected at the destination country rate, often through IOSS.
For a 12 euro product shipped alone, 3 euros of duty plus 2 euros of handling fee adds over 40 percent to the cost. This is pushing many sellers towards bulk imports into an EU warehouse; see dropshipping vs bulk import.
Common mistakes
- Comparing an EXW quote with a FOB quote as if they were equivalent.
- Forgetting that duty is calculated on CIF, not on the product price alone.
- Ignoring anti-dumping duties, which can change a product's profitability completely.
- Using a single average freight cost when rates can double in peak season.
- Counting recoverable VAT as a cost, or forgetting non-recoverable VAT under DDP.
- Leaving out samples, testing, inspection and the cost of defective units.
How Cina helps
The templates and checklists guide in Cina resources includes a landed cost spreadsheet that follows the method above. Comparing several suppliers in the supplier directory and several forwarders in the freight forwarders directory gives you real figures for the two biggest variables, product cost and freight. If you consolidate orders from several factories, a warehouse in China can reduce the number of separate shipments and customs declarations.
Conclusion
Landed cost turns a factory quote into a business decision. Gather the supplier price, packing data, freight quotes and the TARIC duty rate, apply the CIF-based duty calculation, add every fee, and treat VAT according to whether you can recover it. Run the numbers for each product before ordering, and update them with real invoices after each shipment so your pricing stays accurate.
