What landed cost actually includes
Volos Global
The single most common export pricing mistake is quoting a foreign buyer your domestic price plus shipping. Landed cost is the full cost of getting one unit into your buyer's country, and it usually lands 20–45% above cost of goods for first-time exporters.
Here is what actually goes into it.
The line items
Working from a $100 cost of goods, a realistic breakdown for a mid-weight manufactured good might look like this:
| Component | Typical range | Notes |
|---|---|---|
| Cost of goods | $100 | Your baseline |
| Export packaging | $1–4 | Often heavier than domestic packaging |
| Inland freight to port | $2–6 | Factory to origin port or airport |
| International freight | $8–25 | Highly mode- and volume-dependent |
| Insurance | $0.50–2 | Usually a small percentage of value |
| Duty | $0–20 | Destination rate on the customs value |
| VAT / GST | Varies | Often recoverable by the importer |
| Customs brokerage | $2–6 | Per-entry fees, amortized per unit |
| Destination handling | $2–5 | Terminal, delivery, documentation |
Duty is the item people focus on, and it is genuinely important — but notice that freight and handling frequently exceed it. A market with a 0% duty rate under a trade agreement can still be the more expensive destination once logistics are counted.
The items people forget
- Duty is charged on customs value, not your invoice total. Depending on the country's valuation rules, freight and insurance may be inside the dutiable base. That makes duty and freight interact rather than simply add.
- VAT is not usually your cost, but it is your buyer's cash flow. In most markets a registered importer recovers VAT. It still affects their working capital and therefore your negotiation.
- Per-entry fees do not scale with unit count. Brokerage on a 50-unit sample shipment can dominate per-unit economics and make a pilot look unrepresentative. Model your first shipment and your steady-state shipment separately.
- Currency movement between quote and payment. If you quote in the buyer's currency on 60-day terms, you have taken an FX position whether or not you meant to.
- Compliance costs specific to the market. Certification, marking, labeling, or testing can be one-time or per-shipment, and they rarely appear in a freight quote.
Incoterms decide who pays
Landed cost is only meaningful alongside the Incoterm, because the term draws the line between your costs and your buyer's:
- EXW (Ex Works). The buyer takes over at your door. Cheapest for you, hardest for an inexperienced importer, and it can lose deals.
- FOB (Free on Board). You cover getting the goods onto the vessel at origin. A common first-export middle ground.
- CIF (Cost, Insurance and Freight). You cover freight and insurance to the destination port; duties remain the buyer's.
- DDP (Delivered Duty Paid). You cover everything, including destination duties. Most attractive to buyers and riskiest for you, since you are now exposed to a customs regime you may not know.
Two quotes for the same product are not comparable unless they use the same term. When a buyer says a competitor is cheaper, the first question is which Incoterm that price assumed.
What to do with the number
Once you have landed cost per market, you can compute the thing that actually matters: margin at a defensible local selling price. A market with high landed cost and high local price beats a market with low landed cost and no willingness to pay.
Volos reports estimate landed cost and margin for each candidate market, and label freight as a band rather than a quote — because until a forwarder prices your actual dimensions, weight, and lane, anyone presenting a single exact number is guessing with false precision. Use the bands to rank markets, then get real quotes for the one or two you decide to pursue.