A quote is one line of twelve. This page puts the other eleven on the table and shows how to estimate each one. It also covers the three costs buyers forget and how to build a cost sheet you can defend. For the duty and clearance steps in detail, read import duties and customs.
What goes into landed cost?
Landed cost is the money that leaves your account before the goods sit in your warehouse, divided by the units that arrived.
Incoterms are the three-letter trade terms: FOB means the seller loads the goods on board at the named port; CIF means the seller also pays freight and insurance to the destination port.
Twelve lines, in the order the money leaves.
- Goods value. The FOB price times the quantity, plus tooling, sample fees and any setup you paid.
- Inland transport in China. Truck from the factory gate to the port named on the quote.
- Export declaration and local charges. Documents, inspection if any, and terminal handling at origin.
- Main freight. Sea or air, per container or per kilo.
- Cargo insurance. Cover from warehouse to warehouse, usually priced on the CIF value, the value with freight and insurance inside.
- Destination port charges. Terminal handling, documents, and the fees your port adds.
- Duty. The customs value multiplied by the rate for your HS code. The HS code is the product number customs uses.
- Import VAT (value added tax) or sales tax. Charged at the border by your country, on a base your tax authority sets.
- Customs broker fee. The broker is the licensed agent who files your import declaration. One entry, plus extras.
- Inland delivery. Port to your warehouse, per truck or per pallet.
- Bank charges. Your transfer fee, the correspondent bank's fee, and any charge for the currency.
- Currency loss. The gap between the rate you planned with and the rate you got.
A 13th line is real money too: the cost of the cash tied up while the goods travel. Put it in as interest, and it stops being invisible.
How do you estimate each line?
Estimate every line as a range, and write down who gave you the number and when it expires.
- Goods value. Take the signed PI (proforma invoice). Add tooling and sample fees, and say whether the sample fee is deducted later.
- Inland transport. Ask the factory for the truck cost to the named port, per container. It changes with the port and the season.
- Export charges. Most FOB prices already include export declaration. Ask what is inside the FOB price and what is billed on top.
- Freight. Your forwarder quotes per container and per route. Ask for the validity date, because a sea rate can move inside a month.
- Insurance. Ask your broker for a rate on the CIF value, and check that the cover runs warehouse to warehouse.
- Destination charges. Ask for a destination fee schedule before you book. The same container can carry different fees at two terminals in one port.
- Duty. Get the code in writing from your customs or your broker, then the rate for that code and that origin.
- VAT or sales tax. Take the rate from your tax authority. Ask your accountant how the import VAT is recovered, and how long that takes.
- Broker fee. Ask for the base fee per entry, and the price of an inspection, an amendment and a second entry.
- Inland delivery. Give the broker your postcode and ask for a door price. Port-to-door and port-to-port are different products.
- Bank charges. Ask your bank for the outgoing transfer fee and the correspondent fee. A payment in a second currency adds a conversion.
- Currency. Use the rate you will actually get, not the mid-market rate on a website. Add a cushion; 3–5% is a working range in our experience, not a rule.
A line with no owner and no expiry date is a guess.
Which three costs do buyers forget?
Demurrage and detention, the broker's extra charges, and the cash tied up in import VAT.
- Demurrage and detention. Demurrage is the charge for keeping a container at the port. Detention is the charge for keeping it outside the port. Both start after the free days the carrier allows. In our experience five to ten free days is common, and it is a contract term, not a right. One week of document delay can cost more than the duty on the container.
- The broker's extras. The base fee buys one declaration. An inspection, an amendment, overtime, a second entry, storage at the terminal: each one is a new line on the invoice. Ask for the list before the ship arrives.
- Import VAT cash. You pay the VAT at the border and recover it against your sales later, or not at all if you are not registered. Ask your accountant how many weeks the money sits. Then charge that as a cost of money, next to interest.
How do you build your own cost sheet?
One sheet, one row per cost, two results: total landed cost and landed cost per unit.
- Order the rows the way the money leaves. Goods, China side, freight, border, inland. A row in the wrong place hides a cost.
- Columns. Item, quantity, unit, unit price, currency, exchange rate, amount in your currency, fixed or per unit, source, date checked, expiry date.
- A parameter block at the top. Exchange rate, freight validity, duty rate, VAT rate, bank fee, insurance rate. Change one cell there, not twelve rows below.
- Two results. Total landed cost, and landed cost per unit. Per unit is the number you compare with your selling price.
- Three scenarios. Base case, worst case, break-even. Worst case is the one that tells you whether the order can hurt you.
- One buffer row. Hidden costs, 3–8% in our experience, kept in their own row and named as a buffer.
- A source column. Who gave you the number and when. A cost sheet without a source column is an opinion with decimals.
Keep the sheet for the next order. The second container is where the estimates become knowledge.
When is the cheap quote actually cheaper?
When the two quotes use the same trade term, the same port, the same packaging and the same payment term, the difference is real.
Check seven things before you believe a price gap.
- Same Incoterm and same port. FOB Shanghai and FOB Ningbo are not the same price.
- Same carton and units per carton. Ask for the carton size in cm and the count.
- Same payment term, or the interest added to both.
- Same specification in writing. Material, thickness, weight, and the approved sample date.
- Same certificate set. A missing certificate is a cost you will pay later, at the border or at the market.
- Same defect allowance. A supplier who accepts no defects is quoting a different product.
- Same delivery window. A longer wait ties up your cash for longer.
If one of the seven is different, the price gap is measuring that difference, not the product.
Do-this checklist
- Write the twelve cost lines before you ask for a second quote.
- Convert every quote to the same Incoterm and the same port.
- Ask each supplier for carton size and units per carton.
- Get the HS code and the duty rate in writing.
- Ask your tax adviser how import VAT is recovered and how long it takes.
- Ask the forwarder for a destination fee schedule and the free days.
- Ask for freight validity dates and re-check them before booking.
- Add the interest on the cash tied up from payment to warehouse.
- Add a buffer row, labelled as a buffer.
- Build the sheet with a source column and a date on every number.
- Run a worst case before you place the order.
- Compare landed cost per unit, not the first line.
- Keep the sheet and compare it with the real invoices after arrival.
Related reading
Related products
Sources
- World Trade Organization (WTO) — Customs Valuation gateway — https://www.wto.org/english/tratop_e/cusval_e/cusval_e.htm — checked 2026-10-28. "The WTO agreement on customs valuation aims for a fair, uniform and neutral system for the valuation of goods for customs purposes — a system that conforms to commercial realities, and which outlaws the use of arbitrary or fictitious customs values."
- International Chamber of Commerce (ICC) — Incoterms® 2020 — https://iccwbo.org/business-solutions/incoterms-rules/incoterms-2020/ — checked 2026-10-28. "Incoterms® rules are a set of eleven three-letter trade terms, reflecting business-to-business practice in contracts for the sale and purchase of goods."
- World Customs Organization (WCO) — What is the Harmonized System? — https://www.wcoomd.org/en/topics/nomenclature/overview.aspx — checked 2026-10-28. "The Harmonized System is used by more than 200 countries and economies as a basis for their Customs tariffs and for the collection of international trade statistics."
- YIWU RUIHA TRADING CO.,LTD. — service terms, confirmed first-hand with staff — checked 2026-10-28. "FOB Yiwu, tax not included; 100% T/T in advance; we do not book freight, we do not act as a freight forwarder, and we do not offer DDP."
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