Enter the product cost ($), the shipping cost ($), the customs cost ($), the risk cost ($), and the overhead cost ($) into the Landed Cost Calculator. The calculator will evaluate and display the Landed Cost. 

Landed Cost Formula

The following formula is used to calculate the Landed Cost. 

LC = PC  + S + CC + R + O
  • Where LC is the Landed Cost ($)
  • PC is the product cost ($) 
  • S is the shipping cost ($) 
  • CC is the customs cost ($) 
  • R is the risk cost ($)
  • O is the overhead cost ($)

To calculate the landed cost, sum the product cost, shipping cost, customs cost, risk cost, and overhead costs, together.

How to Calculate Landed Cost?

The following example problems outline how to calculate Landed Cost.

Example Problem #1

  1. First, determine the product cost ($). The product cost ($) is given as 50 .
  2. Next, determine the shipping cost ($). The shipping cost ($) is calculated as  30 .
  3. Next, determine the customs cost ($). The customs cost ($) is found to be 20.
  4. Next, determine the risk cost ($). For this example, the risk cost is $ 50.00.
  5. Next, determine the overhead cost. This is measured to be $60.00
  6. Finally, calculate the Landed Cost using the formula above: 

LC = PC  + S + CC + R + O

Inserting the values from above yields: 

LC = 50 + 30 + 20 + 50 + 60 = 210.00($)

FAQ

What factors can affect the shipping cost in the Landed Cost calculation?

The shipping cost can be influenced by several factors including the weight and volume of the product, the distance between the shipping origin and destination, the type of transportation (air, sea, land), and the speed of delivery required. Additionally, fuel prices and seasonal demand can also affect shipping costs.

How can businesses reduce their Landed Cost?

Businesses can reduce their Landed Cost by negotiating better rates with suppliers for product and shipping costs, optimizing their supply chain to reduce transit times and costs, consolidating shipments to save on shipping costs, and seeking more favorable terms for customs duties. Additionally, reducing the risk cost through better quality control and insurance options can also contribute to lower Landed Costs.

Why is calculating the Landed Cost important for businesses?

Calculating the Landed Cost is crucial for businesses to accurately determine the total cost of getting a product from the manufacturer to the final destination. It helps in setting the right sale price, maintaining profitability, managing the budget effectively, and making informed decisions about sourcing and logistics. Understanding the Landed Cost is also essential for businesses to stay competitive in the market by controlling costs and optimizing their supply chain.