Updated September 2026 · 8 min read
Short answer: Landed cost per unit is the total cost to get a product to your door, divided by the number of units. To work out how to calculate landed cost per unit, add the product cost, shipping, insurance, duties, customs fees, and any other charges for the order, then divide by the units you received.
The price on a supplier’s invoice is only part of what you pay. Freight, duties, and fees can add a big chunk on top, especially on imported goods. If you price your products from the invoice price alone, you can end up selling at a much thinner margin than you think. This guide walks through each cost, the formula, and a full example.
What is landed cost?
Landed cost is the full cost of a product once it has “landed” at your store or warehouse and is ready to sell. It includes the purchase price plus everything you paid to get it there. You’ll use it to set retail prices, compare suppliers, and see which products actually make money.
What goes into landed cost?
Not every order has every cost, but here’s the full list to check.
| Cost | What it is | Applies to |
|---|---|---|
| Product cost | The supplier’s price for the goods | Every order |
| Freight | Ocean, air, truck, or parcel shipping | Every order |
| Insurance | Cargo coverage while goods are in transit | Most imports, some domestic |
| Duties and tariffs | Taxes on imported goods, based on the product’s tariff classification | Imports |
| Merchandise Processing Fee (MPF) | A CBP fee on formal entries | Imports |
| Harbor Maintenance Fee (HMF) | A fee on cargo moving through U.S. ports by ship | Ocean imports |
| Customs broker fee | What your broker charges to clear the shipment | Imports |
| Customs bond | Cost of your single-entry or continuous bond | Imports |
| Delivery and handling | Port pickup, warehouse fees, last-mile delivery | Most orders |
| Payment fees | Bank wire, currency conversion, or card fees | Some orders |
Duties and tariffs
Duty rates come from the Harmonized Tariff Schedule of the United States, published by the U.S. International Trade Commission. The rate depends on the product’s classification and country of origin. For U.S. imports, duty is generally charged on the value of the goods, not including international freight and insurance. Extra tariffs on certain countries and products changed often in 2025 and 2026, so confirm current rates with your customs broker before you order.
Customs fees
For formal entries, CBP charges a Merchandise Processing Fee of 0.3464% of the value of the goods, with a minimum and a maximum. For fiscal year 2026 the range was $33.58 to $651.50. For entries on or after October 1, 2026 (fiscal year 2027), it’s $34.58 to $670.86. Ocean shipments also pay a Harbor Maintenance Fee of 0.125% of the cargo value. For more on bonds, see our guide to customs bonds.
This is general information, not customs or tax advice. Confirm fees with a licensed customs broker.
0.3464%
MPF rate on formal entries, with a minimum and maximum
0.125%
Harbor Maintenance Fee on ocean cargo value
$34.58
MPF minimum for entries from October 1, 2026
How to calculate landed cost per unit: the formula
Landed cost per unit = (product cost + shipping + insurance + duties + fees + other costs) ÷ units received
Use units received, not units ordered. If some arrive damaged or missing and you can’t get a credit, the good units carry that cost.
At a glance: Calculating landed cost
1
Gather invoices. Collect the supplier, freight, broker, and delivery invoices.
2
Add every cost. Total the product cost and all shipping, duty, and fee charges.
3
Count good units. Count what arrived in sellable condition.
4
Divide. Divide total cost by sellable units to get cost per unit.
Worked example: an imported order
Here’s a full example with clearly labeled example numbers. You’re importing 1,000 ceramic mugs by ocean freight.
| Cost item | Amount | How it was figured |
|---|---|---|
| Product cost | $4,000.00 | 1,000 mugs × $4.00 (example price) |
| Ocean freight | $900.00 | Example quote from a forwarder |
| Cargo insurance | $40.00 | Example quote |
| Duty | $400.00 | Example 10% rate × $4,000 goods value |
| MPF | $34.58 | 0.3464% × $4,000 = $13.86, below the minimum, so the FY2027 minimum applies |
| HMF | $5.00 | 0.125% × $4,000 |
| Customs broker | $150.00 | Example broker fee |
| Single-entry bond | $100.00 | Example quote |
| Port pickup and delivery | $350.00 | Example trucking quote |
| Total | $5,979.58 | |
| Per unit (1,000 received) | $5.98 | $5,979.58 ÷ 1,000 |
In this example, a mug with a $4.00 invoice price actually costs about $5.98 on your shelf, roughly 50% more. If you’d priced it at $8.00 based on the invoice alone, you’d think you had a 50% margin. Your real margin would be about 25%.
How do you split costs across different products?
When one shipment holds several products, you need to divide shared costs fairly. There are three common ways:
- By value: Split costs based on each product’s share of the invoice. Good for duties and value-based fees.
- By weight or volume: Split freight based on how much space or weight each product uses. Good for bulky items.
- By units: Split evenly per unit. Simple, and fine when products are similar in size and price.
Many small importers use value for duties and fees, and volume for freight. Pick a method and use it consistently.
A quick split example
Say one shipment has $3,000 of mugs and $1,000 of coasters, and freight is $900 (example numbers). Split by value, mugs carry 75% of freight ($675) and coasters carry 25% ($225). But if coasters take up only 10% of the container space, splitting by volume would give them $90 instead. Choose the method that best matches what drives each cost.
What about domestic orders?
Landed cost matters for domestic orders too. There are no duties, but shipping, handling, and payment fees still add up. A $500 order with $60 in freight has a landed cost 12% higher than the invoice. On small, heavy, or low-priced items, freight alone can wipe out your margin. That’s one reason to compare free-freight minimums and order in full cases.
Checklist: Before you trust your landed cost
- ✅ Broker, bond, and delivery fees included
- ✅ Units received used, not units ordered
- ✅ Duty rates checked against current tariffs
- ✅ Currency conversion and wire fees added
- ✅ Freight updated for this shipment
- ✅ Retail price based on landed cost, not the invoice price
How do you use landed cost to set prices?
Once you know your landed cost, use it as the “cost” in your pricing math. Our guide on markup vs. margin shows how to turn cost into a price that hits your target margin. If you’re a brand setting wholesale prices for stores, see how to calculate wholesale price.
Recalculate landed cost every time you reorder. Freight and tariffs can change between shipments, and a product that was profitable last quarter might not be now.
FAQ
What is the easiest way to calculate landed cost per unit?
Add every cost on the order, including freight, duties, and fees, then divide by the number of sellable units you received. A simple spreadsheet works well.
Is landed cost the same as cost of goods sold?
Not exactly. Landed cost is the cost to acquire and receive inventory. Cost of goods sold is an accounting figure for the inventory you actually sold in a period. Landed cost usually feeds into it. Ask your accountant how to record it.
Do I include duties in landed cost?
Yes. Duties, tariffs, and customs fees are all part of landed cost for imported goods.
Does Incoterms choice affect landed cost?
Yes. Your Incoterm decides which costs the supplier pays and which you pay. Terms where you take over earlier in the journey mean more costs to add yourself.
Bottom line
Your real product cost is the landed cost, not the invoice price. Add product cost, freight, insurance, duties, customs fees, and delivery, then divide by sellable units. Use that number for every pricing decision, and recalculate it each time you reorder.
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