How to Calculate Your Total Landed Cost for Imports
The price your supplier quotes is not what your product really costs. By the time it reaches your shelf, you have paid freight, insurance, duties, port charges, clearing fees, delivery, bank charges and often exchange-rate losses. The total is your landed cost, and it is the number your selling price must be built on.
This guide shows you how to calculate total landed cost for imports into Nigeria, step by step, with a worked example.
Key takeaways
- Landed cost = product + freight + insurance + duties and taxes + port and clearing + delivery + other costs.
- In our example, a US$15 product costs about US$24.41 landed, 63% more.
- Allocate shared costs by value, volume or weight depending on the cost type.
- Set selling prices from landed cost per unit, not supplier price.
What is landed cost?
Landed cost is the total cost of getting a product from your supplier to your warehouse (or to the customer), ready for sale.
Landed cost = Product cost + Shipping + Insurance + Duties and taxes + Port and clearing charges +
Inland delivery + Other costs
Landed cost per unit = Total landed cost ÷ Number of units
Why landed cost matters
- Pricing: set prices that protect your margin.
- Supplier comparison: a cheaper supplier far away may cost more once landed.
- Mode decisions: compare air vs sea properly.
- Cash planning: know how much money you need before goods arrive.
- Profitability tracking: see which products actually make money.
The 8 components of landed cost
1. Product cost
The supplier's invoice value, based on your Incoterm (EXW, FOB, CIF, etc.). See Incoterms explained.
2. Origin costs
Pickup, export clearance and origin handling, if not included in the supplier's price.
3. International freight
Sea or air freight, including surcharges.
4. Insurance
Cargo insurance, usually calculated on CIF + 10%. See do I need cargo insurance.
5. Duties, levies and taxes
Import duty, surcharge, ETLS, CISS and VAT, based mainly on CIF value. See how import duties are calculated.
6. Port, terminal and clearing costs
Terminal handling, shipping line charges, clearing agency fees, permits, examination costs.
7. Inland delivery
Haulage from port or airport to your warehouse, plus empty container return.
8. Other costs often forgotten
- Bank charges for international transfers and Form M processing.
- Exchange-rate movements between order and payment.
- Product certification and testing.
- Warehousing and handling.
- Financing costs (interest on borrowed capital).
- Losses from damage or shrinkage.
Worked example: landed cost for a sea import
A Lagos retailer imports 2,000 units of small kitchen appliances from China in a 40ft container.
Assumptions (illustrative):
- FOB product cost: US$30,000 (US$15 per unit)
- Duty rate: 20%
- Exchange rate used: 1,500 per US$ (for illustration only)₦
Step 1: CIF value
| Item | US$ |
|---|---|
| FOB value | 30,000 |
| Ocean freight (40ft) | 3,500 |
| Insurance (about 0.3% of CIF + 10%, rounded) | 115 |
| CIF value | 33,615 |
Step 2: Duties and taxes
| Charge | Calculation | US$ |
|---|---|---|
| Import duty | 20% × 33,615 | 6,723.00 |
| Surcharge | 7% × 6,723 | 470.61 |
| ETLS | 0.5% × 33,615 | 168.08 |
| CISS | 1% × 30,000 | 300.00 |
| VAT | 7.5% × (33,615 + 6,723 + 470.61 + 168.08 + 300) | 3,095.75 |
| Total duties and taxes | 10,757.44 |
Levy structures change. Confirm current charges on your assessment.
Step 3: Port, clearing, delivery and other costs (illustrative)
| Item | US$ equivalent |
|---|---|
| Terminal and shipping line charges | 1,200 |
| Clearing and agency fees | 600 |
| SONCAP and permits | 400 |
| Haulage to warehouse and empty return | 700 |
| Bank charges | 150 |
| Contingency (delays, FX, 3%) | 1,400 |
| Subtotal | 4,450 |
Step 4: Total landed cost
| US$ | |||||
|---|---|---|---|---|---|
| CIF value | 33,615.00 | ||||
| Duties and taxes | 10,757.44 | ||||
| Port, clearing, delivery, other | 4,450.00 | ||||
| Total landed cost | 48,822.44 | ||||
| Landed cost per unit | 24.41 | ||||
| In naira (at | ₦ | 1,500/US$) | ≈ | ₦ | 36,617 per unit |
A product bought for US$15 actually costs about US$24.41 landed, 63% more than the supplier price.
Note on VAT: if you are VAT-registered and eligible to recover input VAT under Nigeria's tax rules, the import VAT may be recoverable, which lowers your effective cost. Take advice from your tax adviser.
How to allocate landed cost across different products
When a shipment contains different products, allocate shared costs fairly:
- By value, for duties and insurance (which are value-based).
- By volume (cbm), for sea freight and warehousing.
- By weight, for air freight and heavy goods.
- By units, for simple per-item costs like labelling.
Use each product's own duty rate for duty calculations.
Setting your selling price
Once you know landed cost per unit:
Selling price = Landed cost per unit ÷ (1 − target gross margin %)
Example: landed cost 36,617 with a 35% target margin 36,617 ÷ 0.65 = about 56,334.₦→₦₦
Also account for local distribution, marketing, returns and your own VAT obligations on sales.
Tips to reduce landed cost
- Buy FOB and control freight yourself.
- Consolidate shipments, see cargo consolidation.
- Fill containers efficiently, see FCL vs LCL.
- Verify HS codes to avoid overpaying duty.
- Clear within free days to avoid storage and demurrage.
- Plan purchases to reduce emergency air freight.
A quick landed cost template
Use these columns in a spreadsheet for every shipment:
| Column | Example entry | |
|---|---|---|
| Product / SKU | Blender model X | |
| Units | 2,000 | |
| FOB value | US$30,000 | |
| Freight and insurance (allocated) | US$3,615 | |
| Duties and taxes | US$10,757 | |
| Port, clearing, delivery, other | US$4,450 | |
| Total landed cost | US$48,822 | |
| Landed cost per unit | US$24.41 | |
| Exchange rate used | ₦ | 1,500/US$ |
Update it with actual figures after each shipment, so your next estimate is more accurate.
Frequently asked questions
What is included in landed cost?
Product cost, freight, insurance, duties and taxes, port and clearing charges, inland delivery and other costs such as bank fees and financing.
Is VAT part of landed cost?
Include it for cash planning. Whether it is a true cost depends on your VAT registration and ability to recover input VAT.
How do exchange rates affect landed cost?
Duties are paid in naira based on the rate at assessment, and supplier payments depend on the rate when you pay. Build in a contingency.
Can a freight forwarder calculate landed cost for me?
Yes. A good forwarder provides an itemised estimate before you commit to the order.
Know your true cost before you buy
DE-BLINGS provides clear landed cost estimates, freight, duties, port charges and delivery, before you place your order, so you can price with confidence. Get a free quote today or explore our freight forwarding services.
