How landed cost is calculated
Landed cost is the total a buyer pays to have goods available at the point of use. It starts from the supplier price and adds every charge between the factory gate and delivery.
Cost lines between price and delivery
| Stage | What belongs here |
|---|---|
| Supplier price | Goods value at the agreed Incoterm. The Incoterm decides which later lines are already included. |
| Export and freight | Inland transport to port, ocean or air freight, and marine insurance where taken. |
| Border | Duty and levies, VAT or equivalent, brokerage and port charges. The classification and rate depend on the goods and destination. |
| Destination | Inland haulage, unloading and any local Handling or inspection charge up to the delivery point. |
What stays open until confirmed
Duty classification, the applicable rate and VAT treatment are frequently unresolved in a first-pass model. They are recorded as pending rather than assumed, because a single tariff line can move the delivered cost materially.
Worked example
The Ghana solar import study walks a ground-mount module shipment through this sequence and labels which lines are sourced, which are scenario values, and which remain to be confirmed before purchase. Its figures are scenario estimates for that stated case, not a quotation.
What this model does not tell you
It does not tell you the price you will be charged, whether your goods will be classified as you expect, or what your forwarder will quote. It shows the structure of the cost and which inputs you still have to obtain.
How this differs from the other classes
Landed cost stops at the delivery point. It answers what the goods cost to have in hand, and says nothing about what they will cost to run. The other three method pages start where this one ends.
Questions to put to a supplier
- Which Incoterm is the quoted price based on, and exactly which costs does it include?
- Which HS heading will be declared, and does the commercial invoice show it?
- Who is the importer of record, and is duty and VAT included in the figure quoted?
- What freight basis is assumed — full container, shared container, or air?
- Which charges at destination are excluded from the quote?
The input most often left unverified
Tariff classification. A supplier quote normally states a price and an Incoterm; it rarely states the heading under which the goods will be declared. Because the rate follows the classification, an unverified heading is the single largest source of error in a landed-cost estimate — and it is the buyer, not the supplier, who carries that risk.