# How to work out landed cost

Landed cost is the total cost of getting goods to your door. Add the goods price, international freight and insurance, duty, broker fees and local delivery. Leave out GST you can claim back. Divide by units.

Free tool: [Landed cost calculator](https://www.pulsify.tech/free-tools/landed-cost-calculator/). Enter the goods price, freight, duty and fees to get the landed cost per unit.

## Why it matters

If you price on the supplier's unit cost alone, freight and duty eat your margin. Landed cost shows the true cost per unit, so you can price and compare suppliers properly.

It also keeps GST right. Import GST is a credit you claim on your BAS. It is not part of the stock cost.

## The steps

1. **List every cost.** Goods price, international freight, insurance, customs duty, broker or agent fees, port and terminal fees and local delivery to your warehouse.
2. **Convert to Australian dollars.** Use the same exchange rate source for the goods and the freight.
3. **Work out customs value.** Customs value is set by the customs rules. The ABF page explains how international transport and insurance are counted in the value used for import GST.
4. **Work out duty.** Apply the duty rate from the tariff to the customs value. Check the rate for your product code.
5. **Work out import GST.** Import GST is 10% of the value of the taxable importation. That is customs value plus duty plus international transport and insurance not already in the customs value.
6. **Take GST out of cost.** If you are registered for GST and import for business, claim the import GST as a credit. Do not include it in landed cost.
7. **Add the costs and divide.** Add all costs excluding GST. Divide by the number of units to get landed cost per unit.

## Worked example

Example Imports Pty Ltd buys 1,000 units priced free on board at A$20.00 each, using an example duty rate of 5%.

| Item | Working | Amount |
| --- | --- | --- |
| Goods (customs value) | 1,000 x A$20.00 | A$20,000.00 |
| International freight | Invoice | A$1,800.00 |
| Insurance | Invoice | A$200.00 |
| Customs duty at 5% | 20,000 x 5% | A$1,000.00 |
| Broker fee | Invoice | A$350.00 |
| Local delivery | Invoice | A$450.00 |
| Landed cost ex GST | Sum | A$23,800.00 |
| Landed cost per unit | 23,800 / 1,000 | A$23.80 |
| Import GST (claimed back) | (20,000 + 1,000 + 1,800 + 200) x 10% | A$2,300.00 |

The unit price is A$20.00 but the landed cost is A$23.80, which is 19% higher. The A$2,300 import GST goes on the BAS as a credit.

## Common mistakes

- Using the supplier price as the cost.
- Putting GST into stock cost.
- Using different exchange rates for goods and freight.
- Guessing the duty rate instead of checking the tariff.

## Common questions

### Is local freight part of landed cost?

Yes. Delivery to your warehouse is a cost of getting the goods ready to sell.

### Does customs value include freight?

It depends on the terms of sale. The ABF explains how international freight and insurance are counted.

### Is import GST a cost?

If you can claim it as a credit, no. Claim it on your BAS.

## Next step

Use the [Landed cost calculator](https://www.pulsify.tech/free-tools/landed-cost-calculator/) first. Then see [how to code GST on imported goods, freight and customs bills](https://www.pulsify.tech/how-to/code-gst-on-imported-goods-freight-and-customs-bills/).

## Sources

- ATO: GST and imported goods: https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/in-detail/rules-for-specific-transactions/international-transactions/gst-and-imported-goods
- ABF: GST and other taxes when importing: https://www.abf.gov.au/importing-exporting-and-manufacturing/importing/cost-of-importing-goods/gst-and-other-taxes

Source: https://www.pulsify.tech/how-to/work-out-landed-cost/ (last checked 2026-10-20)