Landed cost is the number that tells you whether a cross-border sale actually makes money. Most brands price off product cost plus a rough shipping guess — and then wonder why margins evaporate once duties, brokerage, and fulfillment fees hit. Here’s the full formula and how to get it right.
What "landed cost" means
Landed cost is the total cost to get one unit from your supplier into your customer’s hands, across the border, including every fee along the way. It’s not your product cost. It’s not your product cost plus shipping. It’s everything.
Price your product without knowing this number, and you’re guessing at your own margin.
The landed cost formula
At its core:
Landed cost = Product cost + Freight + Duties + Taxes/Fees + Fulfillment
Broken into the real line items:
- Product cost — what you pay your supplier per unit
- Inbound freight — moving goods from supplier to your warehouse (per-unit share of the bulk shipment)
- Duties — now applied to US imports regardless of value, based on HTS classification (unless CUSMA-exempt)
- Customs and brokerage fees — formal entry filing, broker charges, and the Merchandise Processing Fee
- Taxes — import taxes/GST/HST depending on destination
- Fulfillment cost — warehousing, pick-and-pack, and the outbound domestic shipment to the customer
- Returns provision — a realistic per-unit allowance for the percentage that come back
Add those up, divide by units, and you have landed cost per unit — the floor your retail price has to clear with margin to spare.
Why this got harder in 2026
Before late 2025, US shipments under $800 entered duty-free under de minimis, so many brands could ignore duties entirely on small orders. That’s over. With de minimis suspended, duties and formal customs entry now apply to US imports of any value (see The End of De Minimis).
The practical effect on your landed cost calculation:
- Duties are no longer zero on small shipments — they’re a real line every time
- Brokerage and processing fees now attach to shipments that used to carry none
- The only reliable way to lower this is to import in bulk (spreading customs cost across many units) rather than shipping per order
This is why the bulk-import-plus-local-fulfillment model wins on cost, not just speed: it moves the customs and duty line from per order to per bulk shipment, dramatically lowering the per-unit share.
A worked example
Say you sell a wellness product:
- Product cost: $8.00/unit
- Inbound freight (bulk, per-unit share): $0.90
- Duty (say 6% on an $8 value): $0.48
- Brokerage + processing (spread across bulk shipment): $0.35
- Fulfillment (storage + pick/pack + domestic delivery): $5.50
- Returns provision (5% return rate): $0.70
Landed cost ≈ $15.93/unit.
If you were pricing at $19.99 thinking your margin was "product minus a bit of shipping," the real picture is a ~$4 margin before marketing — a very different business than you thought you had. That’s the entire point of the exercise: it turns guessed margin into known margin.
The CUSMA lever
Here’s where it gets strategic. If your goods qualify under CUSMA rules of origin — produced or substantially transformed in Canada, the US, or Mexico — that duty line can drop to zero on North American cross-border shipments. In the example above, removing the $0.48 duty and reducing brokerage complexity meaningfully improves the unit. Knowing whether your products qualify is one of the highest-leverage things you can check. Full detail in CUSMA Explained.
How a fulfillment partner changes the math
A good 3PL/4PL improves landed cost in ways that are hard to replicate alone:
- Bulk import spreads customs and duty across thousands of units
- Negotiated carrier rates lower both inbound freight and outbound delivery
- Correct HTS classification avoids overpaying duty on a wrong code
- CUSMA certification captures duty-free treatment you’re entitled to
- In-market returns recover inventory instead of writing it off
TXG builds landed cost into your setup so you’re pricing off a real number, not a hopeful one.
FAQ
What is included in landed cost?
Product cost, inbound freight, duties, customs and brokerage fees, import taxes, fulfillment (storage, pick-and-pack, delivery), and a provision for returns. It’s the total cost to deliver one unit to your customer across the border.
How do I calculate landed cost per unit?
Total all the costs to get a bulk shipment delivered to customers — product, freight, duties, fees, fulfillment, returns — then divide by the number of units. Importing in bulk lowers the per-unit share of customs and duty costs.
Did the end of de minimis change landed cost?
Yes, significantly. US shipments under $800 used to enter duty-free; now duties and formal customs entry apply regardless of value, so duty and brokerage are real line items on every import. Bulk importing is the main way to keep the per-unit impact low.
Can I avoid duties in my landed cost?
Potentially, if your goods qualify under CUSMA rules of origin, which allow North American-made products to move duty-free within the US, Canada, and Mexico. Otherwise duties are a fixed part of the calculation.
Why is my actual margin lower than expected?
Almost always because the original price was set on product cost plus a rough shipping estimate, leaving out duties, brokerage, fulfillment, and returns. A full landed cost calculation surfaces the real margin.
Want your landed cost calculated properly so you price with confidence? TXG builds the full per-unit number into your fulfillment setup, including bulk-import duty savings and CUSMA certification. Get a fulfillment quote →
Duty rates and customs fees vary by product and change over time. Figures above are illustrative; confirm your specifics with a licensed customs broker.
