What landed cost includes
Landed cost is the total cost of a garment once it is in your warehouse and ready to sell. It is the number your margin depends on, and it can differ sharply between two suppliers whose unit prices look the same.
- Unit price: the garment as quoted, including agreed trims, labels and packing.
- Sample and development costs, spread across the first order if you want a true first order cost.
- Freight from the origin port or airport to your destination.
- Cargo insurance, unless the Incoterm already includes it.
- Import duty for the commodity code and origin.
- Import VAT, GST or sales tax, often recoverable for registered businesses but still a cash flow cost.
- Customs brokerage, port handling and local delivery to your warehouse.
Keep the structure, not a price list
Because rates change, the useful thing to keep is the structure. Build a simple sheet with one row per cost, convert everything into your own currency and divide by the number of sellable pieces. Then change one variable at a time: sea or air, FOB or DDP, one colourway or three. The comparison shows which decisions actually move your margin.
How duty is calculated matters too. In the EU and the UK the customs value usually includes freight and insurance to the border, while the United States generally values goods without international freight. Import taxes are then often calculated on the value plus the duty, so duty has a compounding effect that is easy to miss.
Freight: weight, volume and timing
Sea freight is charged by volume or by container, so carton count and how efficiently garments are folded and packed both matter. Air freight is charged on the greater of actual and volumetric weight, which is why heavy fleece and outerwear cost far more to fly than tees. Consolidated sea shipments suit small first orders that would not fill a container.
Where preference schemes fit
A trade preference can remove duty entirely for qualifying goods, but only when the product meets the rules of origin and the right proof of origin travels with it. Our guide to duty on clothing from Pakistan sets out the main schemes by market.
Questions to settle before comparing suppliers
Ask these for every quotation so the comparison is fair.
- Which Incoterm is each quotation on, and what does it include?
- Which commodity code applies, and has a broker confirmed the duty rate?
- How many cartons will the order make, and what is the total volume and weight?
- Is the delivery date fixed, or can the order travel by sea?
- Which costs are recoverable, such as import VAT, and which are not?
