Landed Cost Calculator

Why landed cost matters for Australian importers

Landed cost is the total cost of a product once it arrives at your warehouse door. It goes beyond the FOB (Free on Board) price your supplier quotes: international freight, marine insurance, customs duty, import GST, quarantine inspection fees, port handling charges, and local cartage. For Australian wholesalers importing from China, the US, Europe, or New Zealand, landed cost can be 20-40% higher than the factory price.

Getting landed cost wrong means your pricing is wrong. If you base selling prices on the FOB cost alone, you underprice products and erode margin on every sale. Accurate landed cost calculation is the foundation of profitable pricing in wholesale and distribution.

Worked example: importing power tools from China

A Perth power tools distributor imports 500 units of a cordless angle grinder from a Ningbo supplier. FOB price is US$42 per unit. The full landed cost breakdown:

The FOB price is US$42 (AU$64.62). The landed cost is AU$81.54, and the net permanent cost (after GST credit) is AU$74.28, a 15% uplift on the FOB price. If the distributor sells at AU$129, the gross margin on FOB cost appears to be 50%, but the true margin on landed cost is 42%. That 8-point difference compounds across thousands of units per year.

Under ChAFTA, the customs duty drops to 0%, saving AU$1,729 on this shipment and reducing the net landed cost to AU$70.82 per unit. But the FTA rate only applies with a valid Certificate of Origin from the supplier. Use the customs duty calculator to compare FTA and general duty rates for your products.

Landed cost components explained

• CIF value: Cost of goods + Insurance + Freight to the Australian port. This is the base for customs duty calculations.
• Customs duty: Determined by the product's tariff classification. General rates are 0-5% for most manufactured goods. FTAs can reduce this to 0%. Look up your rate on the Australian Border Force tariff database.
• Import GST: 10% on CIF value plus duty. Reclaimable as an input tax credit on your BAS if you are GST-registered. A cash flow cost, not a permanent cost. Businesses importing regularly should apply for the Deferred GST Scheme to eliminate the cash flow impact.
• Customs broker fee: AU$250-500 per shipment for standard clearance. Higher for complex classifications or quarantine-controlled goods.
• Port handling and cartage: Terminal handling charges at the port, plus local delivery to your warehouse. Varies by port (Melbourne is typically AU$100-200 more than Sydney for the same container).

Common mistakes in landed cost calculation

Using a stale exchange rate. If you lock in an exchange rate when placing the PO but the rate moves 5% by the time you pay the supplier, your landed cost is 5% wrong. Use the rate at the date of the customs entry (which determines your AUD CIF value) as the baseline for landed cost, and book any exchange rate difference to a separate FX gain/loss account.

Omitting ancillary charges. Customs broker fees, quarantine inspection, fumigation, demurrage, and local cartage are all part of landed cost. If they are booked to general expense accounts instead of allocated to the product, your per-unit cost is understated and your margin analysis is wrong.

Treating import GST as a permanent cost. Import GST is fully reclaimable for GST-registered businesses. Including it in your landed cost for pricing purposes overstates the product cost by 10% and makes your pricing uncompetitive. Your pricing model should use the net landed cost (after GST credit), not the gross amount paid at the border.

How to use this calculator

1. Enter the product cost in the supplier's currency and select the currency.
2. Enter the quantity, freight cost, and insurance cost.
3. Select or enter the customs duty rate for your product's tariff classification.
4. Add other costs: quarantine fees, port charges, local delivery.
5. Optionally enter a target margin to see the required selling price.

Frequently asked questions

How much does landed cost add to the FOB price?

Typically 15-40% depending on the product, origin country, freight mode, and duty rate. Sea freight from China adds 5-10%. Customs duty adds 0-5%. Insurance, broker fees, and cartage add another 2-5%. The total uplift varies by shipment, which is why calculating it per order matters.

Should I include import GST in my landed cost?

For cash flow planning, yes. For pricing decisions, no. Import GST is fully reclaimable on your BAS if the goods are for business use. Your pricing model should use the net landed cost (after GST credit). Including GST in your cost base overstates the product cost and makes your pricing uncompetitive.

How does AP automation help with landed cost tracking?

Every landed cost component arrives as a separate invoice: supplier, freight forwarder, customs broker, cartage. When processed manually, costs get miscoded or delayed. AP automation captures every cost component, codes it to the right purchase order, and makes landed cost data available for analysis in real time.