Import-Export

The landed-cost calculation eight importers out of ten get wrong

The price paid to the supplier is rarely more than 60% of the true cost. Here are the eight lines almost always missing from the sheet.

The landed-cost calculation eight importers out of ten get wrong

Richard CharlesCOO, Co-Founder7 min read

The basic mistake: confusing purchase price with landed cost

An importer buys at $4 and resells at $9, proudly announcing a 125% margin. After freight, insurance, duty, local transport, breakage and bank fees, the true cost is $7.10. The real margin is 26%, before we even discuss the hours spent.

The eight lines almost always missing

Bank and currency fees; pre-shipment inspection; international freight; insurance on declared value; customs duties and local taxes; port handling charges; transport from port to your warehouse; breakage and unsold units. Forgetting a single one of these is enough to turn a good deal into a break-even operation.

The right habit: calculate per unit, not per order

Bring every cost down to the sellable unit, factoring in your observed breakage rate. An order of 500 pieces where 30 arrive unusable means 470 units must absorb the entire cost. That division is what produces an honest selling price.

The 30% rule

Until you have completed three imports and measured your actual costs, add 30% to the cost you think you have. If the deal is still profitable with that safety margin, it probably is. If not, you have just avoided burning your cash.

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