Landed cost is the total cost to get one unit to your door — the FOB (ex-factory) price plus freight, duty, and any other import charges. It is the true cost basis for margin, not the FOB price quoted by the vendor.

How do you calculate landed cost?

Landed cost per unit = FOB cost + freight per unit + (FOB × duty %) + any other per-unit charges. For example, a $10 FOB unit with $1.20 freight, a 16% duty rate, and $0.30 in other charges lands at $10 + $1.20 + $1.60 + $0.30 = $13.10. Duty rates vary by product and country of origin, so use the rate that applies to your goods.

Why does landed cost matter for apparel margin?

Margin planned on FOB alone overstates profit, because freight and duty are real costs of goods that have not been counted yet. Once they are added, the gross margin at a given retail price is lower than the FOB math suggests. Setting target costs and retail prices against landed cost — from the development stage — keeps planned margin honest.

What is included in landed cost?

At minimum: the FOB unit cost, inbound freight, and import duty or tariffs. Depending on how a brand accounts for it, "other" can also cover charges like brokerage, insurance, port fees, or inland freight to the warehouse. This calculator rolls freight, duty, and an "other" field into the per-unit landed cost so the full cost basis is in one number.

// Tools

Landed cost & margin calculator

Landed cost is the all-in cost to get a unit into your warehouse — FOB + freight + duty + other. It is the true cost basis for margin, and the number target costing should be set against from the development stage.

FOB / ex-factory cost ($)

Freight per unit ($)

Duty / tariff (%)

Other per unit ($, optional)

Target retail price ($, optional)

Enter the FOB cost (plus freight, duty, and an optional target retail) to get landed cost and margin.

Plan margin against landed cost, not FOB — freight and duty can move a unit’s true cost by double digits.

// How it works

01
Enter FOB cost
The ex-factory (FOB) unit cost quoted by the vendor.
02
Add freight, duty, and other
Freight per unit, duty/tariff as a percent of FOB, and any other per-unit cost.
03
Read landed cost (and margin)
Landed cost = FOB + freight + (FOB × duty%) + other. Add a target retail to see gross margin.

// Reading the result · where spreadsheets break

The gap between FOB and landed cost is where planned margin quietly leaks. A unit that looks like a healthy markup off its FOB price can land at a much thinner gross margin once freight and duty are added — and that lower margin is the real one. Read the landed cost as the cost basis, then judge the retail price against it, not against FOB.

In a spreadsheet, per-style landed cost is usually a one-time estimate typed in at costing and rarely revisited. Freight rates move, duty depends on the actual country of origin and classification, and the "other" charges differ shipment to shipment — so the figure on the costing sheet drifts from what each style actually cost to land. The margin plan inherits that drift, and it only surfaces when the goods are already on the water or in the building.

// FAQ

Frequently asked questions

What is landed cost?: Landed cost is the total cost to get one unit to your door — the FOB (ex-factory) price plus freight, duty, and any other import charges. It is the true cost basis for margin, not the FOB price quoted by the vendor.
How do you calculate landed cost?: Landed cost per unit = FOB cost + freight per unit + (FOB × duty %) + any other per-unit charges. For example, a $10 FOB unit with $1.20 freight, a 16% duty rate, and $0.30 in other charges lands at $10 + $1.20 + $1.60 + $0.30 = $13.10. Duty rates vary by product and country of origin, so use the rate that applies to your goods.
Why does landed cost matter for apparel margin?: Margin planned on FOB alone overstates profit, because freight and duty are real costs of goods that have not been counted yet. Once they are added, the gross margin at a given retail price is lower than the FOB math suggests. Setting target costs and retail prices against landed cost — from the development stage — keeps planned margin honest.
What is included in landed cost?: At minimum: the FOB unit cost, inbound freight, and import duty or tariffs. Depending on how a brand accounts for it, "other" can also cover charges like brokerage, insurance, port fees, or inland freight to the warehouse. This calculator rolls freight, duty, and an "other" field into the per-unit landed cost so the full cost basis is in one number.

// Related resources

See the connected workflow in RetailNorthstar →

Costing the season off FOB instead of landed cost systematically overstates margin. New to the terms? Read landed cost, initial markup, and gross margin.

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