The quote you get from a Chinese factory is usually 50–75% of what the goods actually cost you. The rest is freight, duty, import tax, inspection, customs fees, currency and service costs — and it is the part that decides whether your margin survives. This guide breaks landed cost into eight layers, shows what each one typically costs in 2026, and works through three real order sizes.
Landed cost in one formula
Landed cost is every dollar you spend until the goods are sitting in your warehouse, divided by the number of units. Use this as your pricing base — not the factory quote.
| Layer | Typical cost | Who usually quotes it |
|---|---|---|
| 1. Product (EXW or FOB) | 50–75% of landed cost | Factory |
| 2. Freight (sea, air, express, rail) | 8–25% of goods value; can exceed 100% by air | Forwarder |
| 3. Duty and Section 301-type tariffs | 0–30%+ of dutiable value | Customs / broker |
| 4. Import VAT / GST / sales tax | 5–27% of (value + freight + duty) | Customs / tax authority |
| 5. Customs entry fees (broker, MPF, HMF, terminal) | $80–$350 per shipment | Broker / terminal |
| 6. Inspection and testing | $200–$400 per man-day; $300–$1,500 per lab test | QC firm / lab |
| 7. Payment and currency costs | 0.5–3% of value | Banks |
| 8. Sourcing service fee | 5–15% of order value (3–5% on large orders) | Sourcing agent |
Rule of thumb: for sea freight and a mid-range duty rate, landed cost lands at 1.3–1.8× the factory quote. For air freight or a high-tariff category, 2× or more is normal. If your margin only works at 1.1×, the product is not ready to import — it is ready to be repriced or re-specified.
Layer 1 — the product price is not one number
Two factories can both say "$6.40 per unit" and mean different things:
- EXW vs FOB — EXW stops at the factory gate; you pay inland trucking, export clearance and port charges. FOB includes delivery to the port and export paperwork. On a 20' container the gap is typically $200–$600, plus your own logistics work. Ask every supplier to quote FOB your nearest port so the numbers are comparable.
- Quantity breaks — most factories have three price tiers: sample, small batch, and container. Moving from 200 to 500 units often drops the unit price 8–15%, which can pay for the extra stock faster than you think.
- Spec inflation — a cheap quote usually wins by quietly changing material thickness, foam density, GSM, or packaging grade. Always compare against a written spec sheet, not a photo.
- Payment terms — a factory offering 3% off for 100% upfront is pricing your risk, not giving you a discount. Standard is 30% deposit, 70% after a passed inspection.
Layer 2 — freight, and why quotes move
Freight is priced on volume (CBM) and weight, whichever is greater, and it swings with fuel and capacity. What to expect in normal market conditions:
| Mode | Best for | Typical all-in cost | Transit |
|---|---|---|---|
| Sea LCL | 1–15 CBM, first orders | $80–$180 per CBM + destination charges | 30–45 days door to door |
| Sea FCL | 15+ CBM | $2,000–$5,500 per 40HQ (varies by lane and season) | 25–40 days door to door |
| Air freight | High value per kg, urgent restock | $4–$8 per kg + fees | 7–12 days door to door |
| Express courier | Samples, under ~100 kg | $6–$12 per kg | 3–7 days |
| China–Europe rail | 1–3 CBM into the EU | Between sea and air | 18–25 days |
The mistake first-time importers make is budgeting from a spot rate they saw in a Facebook group. Freight on the same lane can double within a quarter around Chinese New Year or peak season (August–October). Budget a 20% buffer, and lock the rate in writing with a validity date. See our shipping guide for how to read a freight quote line by line.
Layer 3 — duty and import tax by market
Duty follows the HS code, not the product name. Two similar products can sit at 0% and 12%. This is where you get the classification verified by a customs broker, not by the supplier who wants your order.
| Market | How duty works | Low-value consignments in 2026 |
|---|---|---|
| United States | Duty on the entered value, plus Section 301 tariffs on many China-origin goods; MPF 0.3464% per entry and HMF 0.125% on ocean shipments | The old $800 de minimis exemption no longer applies — every commercial shipment needs a customs entry and pays applicable duty |
| European Union | Duty on CIF value (goods + freight + insurance); import VAT from 17–27% depending on country | The €150 duty relief ended on 1 July 2026; low-value B2C consignments now carry a flat €3 per tariff line until 2028, on top of VAT |
| United Kingdom | Duty by commodity code over £135; import VAT 20% from the first pound | Relief for consignments at or under £135 is still in place and scheduled to end in 2028 |
| Australia | Duty by commodity code; most goods enter at 0–5% | 10% GST applies to low-value imports and is collected by the supplier for sales under AUD 1,000 |
Two structural points that save real money:
- Understand the dutiable base. Most markets value goods on CIF (freight included) — the US is an exception and generally excludes international freight and insurance when they are itemised separately on the invoice. On a $20,000 shipment with $2,500 of freight and a 12% rate, that difference is $300.
- Never let the factory write your HS code. Suppliers often pick the lowest-duty code they can find. If customs disagrees on arrival, the penalty lands on the importer of record — you — not on them. Ask a broker first, and put the code on the commercial invoice.
Layer 4 — the fees nobody quotes you
This is where landed cost models break. None of these appear in a factory quotation:
- Destination charges on LCL — consolidation, de-consolidation, terminal handling, documentation and delivery order fees commonly add $180–$400 per shipment. On a 3 CBM order that is more than the freight itself.
- Customs broker fee — $80–$200 per entry, plus disbursement fees if they advance duty for you.
- Merchandise Processing Fee and Harbour Maintenance Tax (US) — 0.3464% of entered value with a floor and ceiling, plus 0.125% on ocean freight.
- Currency spread — paying RMB through your bank or a payment platform costs 0.5–3% versus the mid-market rate. On $50,000 that is up to $1,500, and nobody puts it in a spreadsheet.
- Warehouse and demurrage — free time at the port is limited (often 3–7 days). Miss it and storage runs $50–$150 per container per day.
- Inspection — a pre-shipment inspection at AQL 2.5 costs roughly $200–$400 per man-day, plus travel if the factory is remote. Cheap insurance against a container of rejects.
- Service fee — if you use a sourcing agent, expect a transparent commission of 5–15% of order value, or 3–5% on large orders. Ask for it in writing and check it is the only line you pay — the alternative model is an undisclosed markup inside the unit price, which costs more and is invisible.
Three worked examples
Assume sea freight, a 10% duty rate, 20% import VAT that you recover later, and a 10% sourcing commission. Numbers are illustrative — your HS code and lane will move them.
| Line | Small test order | Normal order | Container order |
|---|---|---|---|
| Goods value (FOB) | $5,000 | $25,000 | $120,000 |
| Freight (LCL / FCL) | $450 | $1,600 | $4,200 |
| Destination + broker fees | $320 | $420 | $650 |
| Duty | $545 | $2,660 | $12,420 |
| Inspection | $300 | $350 | $700 |
| Sourcing commission | $500 | $2,500 | $4,800 (4%) |
| Landed, duty exclusive | $6,570 | $30,370 | $131,770 |
| Landed / goods value | 1.31× | 1.21× | 1.10× |
Three things to read from that table. First, scale is the biggest cost lever you own: the same product at 24× the volume carries a cost multiplier nine points lower. Second, fixed fees (broker, destination, inspection) hurt small orders disproportionately — which is exactly why first orders should be small but should not stay small. Third, duty is not a fee you can negotiate away; it is a reason to get the product spec and HS code right before you order.
Why DDP quotes hide 20–30%
A "delivered duty paid to my door, $8.90 per unit" quote feels like certainty. It is actually a bundle, and bundles hide margins. When you compare DDP against FOB plus your own freight, the DDP price typically carries a 20–30% premium over the honest sum of its parts — because the forwarder takes the duty risk, assumes the FX risk, and prices both.
DDP is still the right answer for some buyers: small LCL orders, first shipments, or markets where you have no broker relationship. Just insist on the breakdown — goods, freight, duty estimate, clearance — so you know what you are paying for. A supplier or forwarder who refuses to itemise is not protecting a formula; they are protecting a margin. Read FOB vs EXW vs DDP for when each term genuinely wins.
Eight ways to lower landed cost
- Quote everything FOB. Same term across suppliers makes the real cheapest one visible, and it keeps freight under your control.
- Consolidate instead of shipping twice. Two LCL shipments pay destination charges, broker fees and delivery twice. One consolidated shipment at the same volume is usually 15–25% cheaper.
- Move to FCL as soon as volume allows. From roughly 12–15 CBM, FCL beats LCL once you count minimum charges and double handling.
- Design the packaging for the container. A 5 cm reduction in carton height can add hundreds of units per container — a bigger saving than most price negotiations.
- Fix the HS code with a broker. Correct classification prevents underpayment penalties, and occasionally finds a legitimate lower rate.
- Itemise freight on the invoice. In markets that value goods FOB-style, separating freight and insurance from the unit price reduces the duty base — and it is simply good documentation.
- Plan around Chinese New Year. Factories close 2–4 weeks around it (late January to mid February in 2027), freight rates spike before and after. Order in October–November, not December.
- Pay in a way that does not eat 3%. Compare your bank's RMB spread with a regulated payment platform, and keep 30/70 milestone payments so the balance moves after inspection, not before.
Frequently asked questions
What percentage of landed cost is freight?
For sea freight on furniture, home goods and building materials, budget 8–20% of goods value. Light but bulky products (flat-pack furniture, lampshades, pet beds) sit at the top of that range because you pay for volume, not weight.
Is it cheaper to import myself or buy DDP?
Below roughly 3 CBM or on a first shipment, DDP is often cheaper once you price your own time and the broker minimums. Above that, controlling freight and duty yourself is normally cheaper — usually 20–30% less than the bundled rate.
How much duty will I pay on goods from China?
It depends on your HS code and destination. Rates commonly fall between 0% and 12% for consumer goods, with higher rates on specific categories, and the US applies additional Section 301 tariffs to many China-origin products. Ask a customs broker for a binding classification before you place the order.
Do I pay duty on the freight too?
In the EU, UK, Australia and most other markets, yes — duty is calculated on the CIF value, so freight and insurance are dutiable. The US generally excludes international freight and insurance from the dutiable value when they are itemised separately.
How do I avoid paying more than I budgeted?
Build the model before the order, not after: goods at FOB, freight with a 20% buffer, duty from a broker-verified HS code, fixed fees listed individually, inspection, and the service fee in writing. Then treat every quote you receive as a line to check, not a total to accept.
Want a landed cost model for your product?
Send us the product, quantity and destination country. We will compare factory quotations on the same FOB basis, verify the HS code direction with a broker, and give you a landed cost range before you commit a deposit.