Landed Cost Calculator
Work out what a unit actually costs you once freight, duty and import fees are on it — then see what that does to your margin and your break-even ROAS.
Everything that lands on a unit between your supplier’s door and your warehouse.
TGM manages $314M+ in DTC ad spend across 200+ brands
Freight and duty change your break-even ROAS whether or not anyone updates the target. We find the gap between what a unit really costs and what the ad account is optimising to.
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On This Page
- Formula: supplier price + freight + duty + fees + inland, all per unit.
- Duty base differs by country. The US charges duty on the goods value; most others charge on goods + freight + insurance.
- Freight, duty and fees typically add 30–60% on top of what the factory charges.
- Break-even ROAS = 1 ÷ contribution margin, so landed cost moves your ad targets whether you update them or not.
- Allocate freight by volume for ocean, weight for air — not by unit count.
What Is Landed Cost?
Landed cost is what a single unit really costs you by the time it is sitting in your warehouse ready to pick. Not the invoice from the factory — that is one line of it.
The reason it matters more than it sounds: for most imported DTC products, everything after the factory invoice adds 30–60% to the unit cost. A brand running its margin model on the supplier price is not out by a rounding error, it is out by a third or more — and every downstream number, from gross margin to the ROAS target the media buyer is optimising against, inherits that error.
What Goes Into a Landed Cost
The rows brands forget are almost always in the bottom half of this table.
| Cost element | How it is usually quoted | Per-unit basis | Commonly missed? |
|---|---|---|---|
| Goods | Per unit, ex-works or FOB | Already per unit | No |
| International freight | Per container, pallet or kg | ÷ units in shipment | No |
| Insurance | % of cargo value | ÷ units | Sometimes |
| Import duty / tariff | % of dutiable value | Rate × dutiable value | No |
| Customs brokerage & entry | Per entry | ÷ units | Yes |
| Port, terminal & handling | Per container | ÷ units | Yes |
| Government processing fees | % of value, often with a floor and a cap | ÷ units | Yes |
| Inland freight, port to 3PL | Per truck or per pallet | ÷ units | Yes |
| Inbound receiving at the 3PL | Per carton or per hour | ÷ units | Yes |
| Demurrage & detention | Per day, only when things go wrong | ÷ units, when incurred | Yes |
Processing fees, brokerage and port charges are small individually and material together — they are the difference between a modelled margin and a real one.
FOB or CIF — What Your Duty Is Actually Charged On
Most landed cost calculators quietly assume one of these and never tell you which. It is worth more than a rounding error.
- Goods value only (FOB). The United States assesses duty on the transaction value of the merchandise. International freight and insurance are generally outside the dutiable value.
- Goods + freight + insurance (CIF). The EU, the UK, Australia and most other customs regimes bring freight and insurance inside the dutiable value, so you pay duty on the cost of shipping as well as on the product.
On the worked example above — a $6.40 unit carrying $1.60 of freight at a 17.5% rate — that is $1.12 of duty on a FOB basis and $1.40 on a CIF basis. Same shipment, 25% more duty. On 24,000 units a year the choice of basis alone is $6,720. The toggle in the calculator above is there because this should be a decision you make, not one made for you.
Landed Cost vs EXW, FOB, CIF and DDP
Incoterms describe who pays for which leg. Landed cost is your own internal number, built up from whichever term you buy on.
| Term | What the price includes | What you still pay | Use it when |
|---|---|---|---|
| EXW (ex-works) | Goods at the factory door | Everything — origin transport, export clearance, freight, duty, delivery | You have a freight forwarder you trust and want full control |
| FOB | Goods loaded on the vessel at origin | Freight, insurance, duty, fees, inland | The usual default for DTC importing |
| CIF | Goods, freight and insurance to the destination port | Duty, fees, inland | You want one number to the port and are fine paying the supplier’s freight markup |
| DDP | Delivered, duty paid | Little to nothing | You want simplicity — but you are buying their duty assumption too, and you own the liability if it is wrong |
| Landed cost | Not an Incoterm — your cost per unit in your warehouse | — | Always. It is the number your margin model should use |
Splitting Freight Across a Mixed Shipment
One container, eight SKUs, one freight bill. How you split it decides which product looks profitable, and the four methods do not agree.
- By unit — freight ÷ total units. Simple, and wrong the moment your products differ in size. A container of candles and cushions will tell you the candles are expensive to ship.
- By value — in proportion to each SKU’s share of goods value. Matches how duty is assessed, but overloads small expensive items.
- By weight — in proportion to kilograms. Right for air freight, which is priced on chargeable weight.
- By volume — in proportion to cubic metres. Right for ocean freight, which is priced on space.
Allocate on the basis the carrier charged you. Volume for ocean, weight for air, and value only for duty. Getting this wrong does not change your total cost by a cent — it just moves it onto the wrong products, which is worse, because you will scale the ones that look good.
Why Landed Cost Moves Your Break-Even ROAS
This is the connection most landed cost tools stop short of, and it is the one that decides whether you make money.
Contribution margin is what is left of the selling price after every variable cost — landed cost, payment fees, pick and pack, outbound shipping, returns. Landed cost is usually the biggest line in it. So when duty rises or freight rates spike, contribution margin falls and the ROAS you need to break even rises, with nothing having changed in your ad account.
A worked case: a $34 product at $9.25 landed with $8.19 of other variable cost runs a 48.7% contribution margin and breaks even at 2.05x. Move the duty rate from 7.5% to 37.5% and landed cost becomes $11.17, contribution margin falls to 43.1%, and break-even rises to 2.32x. A media buyer hitting 2.2x was profitable in the morning and is not in the afternoon — and every metric on their dashboard looks identical.
Check the numbers against your own: the break-even ROAS calculator, the contribution margin calculator and the profit margin calculator all use the same definition as this page.
What This Calculator Cannot Tell You
Being straight about the limits is more useful than pretending there are none.
- It does not look up your HS code or your duty rate. Classification depends on what the product is made of and how it is constructed, and getting it wrong is a compliance problem, not a modelling one. Get the code from your customs broker, or from your country’s official tariff schedule — the US Harmonized Tariff Schedule or the UK Trade Tariff. Then bring the rate back here.
- It does not know about trade agreements or duty relief. Preferential rates, free trade agreements, duty drawback and foreign trade zones can all change what you actually pay. If one applies to you, enter your effective rate rather than the headline one.
- It does not model de minimis thresholds. Low-value shipment rules differ by country and change; if you ship direct from origin to the customer, your duty exposure may work completely differently from container importing.
- It assumes one currency. If you pay your supplier in a different currency from the one you sell in, your landed cost moves with the exchange rate. Convert before entering, and re-run it when the rate moves.
- It cannot tell you whether your freight quote is good. It takes the number you give it. Re-quoting freight usually moves landed cost more than any duty optimisation available to you.
Glossary
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Contribution Margin
What is left after every variable cost
Break-Even ROAS
The return you need before profit starts
Profit Margin
Gross, net and contribution margin
Markup
Price from cost, and cost from price
Break-Even
Units and revenue needed to cover costs
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