What actually makes up landed cost
| Factor | What it covers |
|---|---|
| Product cost | The per-unit price agreed with the factory |
| Tooling / sample costs | Usually an upfront investment amortized over the production run it funds — but not always strictly one-time: a design revision, a new color/variant, or mold wear over a long run can mean additional tooling later, and multiple sample rounds are common before approval |
| Inspection | Quality control coordinated before shipment |
| International freight & insurance | Sea or air freight plus cargo insurance — cost depends heavily on the shipping term (see EXW / FOB / CIF) |
| Customs duty | Determined by the product's HS/HTS commodity code and destination market — varies by product category, not a flat rate |
| Import VAT / tax | Charged by many destination markets on the combined goods + shipping + duty value |
| Agent / broker fees | Customs clearance and freight-forwarding fees where applicable |
How duty is actually determined
Every product has a Harmonized System (HS) code — the first 6 digits are consistent internationally under the World Customs Organization system, with additional country-specific digits determining the exact duty rate in your destination market. This is why there's no single "China import duty rate" — the rate is specific to the exact product category, not the country of origin alone.
Landed cost checklist
- Confirmed the HS/commodity code for your specific product in your destination market
- Checked the current official duty rate for that code (not a general assumption)
- Confirmed your destination market's import VAT/tax rate and how it's calculated
- Chosen a shipping term (EXW / FOB / CIF / DDP) and understood what it does and doesn't include
- Budgeted tooling/sample costs separately from steady-state per-unit cost
- Confirmed whether a customs broker or agent fee applies for your shipment
- Priced cargo insurance rather than skipping it to save a small amount upfront
- Confirmed inspection/QC costs are included in the budget, not treated as an afterthought
Common budgeting mistakes
Budgeting only on factory unit price — Duty, VAT, freight and agent fees can add a substantial amount on top of the unit price — plan for the full stack, not just the quote.
Assuming one HS code covers a whole product category — Small differences in a product's materials or function can put it in a different HS code with a different duty rate.
Treating tooling as a simple one-time cost — Tooling is usually amortized over the run it funds, so judge your real unit economics on the steady-state production run, not the first order alone — but budget for the realistic chance of additional tooling later (a design revision, a new variant, or mold replacement on a long run), not just the first round.
Skipping insurance to save a small amount upfront — The cost of cargo insurance is usually small relative to the exposure of an uninsured shipment being damaged or lost.
Frequently asked questions
Is this page legal, tax or customs advice?
No. This is general educational content about how landed cost is structured. Verify current rates for your specific case via the official source for your destination market before making a purchasing decision.
How do I get a real cost estimate for my product?
Submit a sourcing request with the product, target quantity and destination market. Each request is reviewed individually before a response.
Have a sourcing question this guide did not answer?
Send a short brief and ask directly. LYBAM replies with what it can confirm and what still needs confirming.