Guide · reviewed October 2026

What is landed cost?

Your $20 tee would like a word.

Landed cost is the full cost of getting one unit into your warehouse: the factory price (FOB), plus freight, plus import duty and any added tariffs. Price from landed cost, not from the factory quote.

The formula

Worked example

A cotton knit tee, made abroad, sold in the US at $40:

Sold at $40, that's a 38% margin, not the 50% you get from the factory price alone. Fees and discounts take it lower again.

Worth knowing

• In the US, duty is usually charged on the price you paid the factory (close to FOB). The EU and UK also add freight and insurance before working out duty.
• Added tariffs depend on where the goods are made and can change. Check them every season.
• Some brands also add customs broker fees, inspection and delivery to their warehouse. If you pay it before the first sale, it belongs in landed cost.

Common mistakes

• Pricing from the factory quote and finding the margin gap after the goods land.
• Forgetting that air freight often costs several times ocean per unit.
• Using last season's duty or tariff rate without checking.

Questions

Is landed cost the same as COGS?

Close, but not quite. Landed cost is per unit, before you sell anything. Cost of goods sold (COGS) is the landed cost of the units you actually sold in a period.

Does landed cost include shipping to customers?

No. Shipping to customers is a selling cost. Landed cost stops at your warehouse door.

How do I find my duty rate?

Find your product's HTS code and its duty rate, then confirm it with a licensed customs broker. OptiSKU suggests a likely code for 111 products as a starting point.

Sources

• Harmonized Tariff Schedule of the United States · U.S. International Trade Commission
  The official US tariff schedule: every HTS code and its general duty rate.
• 19 CFR 152.103, Transaction value · Code of Federal Regulations
  How US Customs values imports: the price paid, plus additions like assists (molds and dies you supply), and excluding ocean freight and insurance.
• USTR Takes Action in Forced Labor Section 301 Investigations (July 2026) · Office of the U.S. Trade Representative
  The announcement of added tariffs of 10% or 12.5% on goods from 60 economies.
• World Container Index · Drewry
  Weekly spot ocean freight rates per 40-foot container on the main East–West routes.
• Incoterms® rules · International Chamber of Commerce
  The official rules behind FOB, DDP, EXW and other shipping terms. Incoterms® 2020 is the current edition.

Checked October 2026. Rates and rules change; confirm duty and tariffs with a licensed customs broker. All sources

Related guides