Landed cost per unit: the only price that compares.
An FOB quote from one supplier and a CIF quote from another are not comparable until everything after the factory is added.
In short. The cost lines that make up landed cost for an imported ingredient — goods, origin charges, freight, insurance, destination charges, duties, brokerage, inland transport, demurrage, bank fees, testing, claims — and how to compare suppliers on different incoterms.
The formula
Landed cost per unit = (goods + every cost incurred to get the lot into your warehouse − credits) ÷ units received. Units received, not ordered: a 100 kg shortfall raises the unit cost.
The cost lines
- Goods (the invoice).
- Origin charges: export customs and inspection fees, fumigation, pallets, terminal handling at origin, documentation.
- Main freight (ocean or air).
- Insurance.
- Destination charges: terminal handling, delivery order fee, port fees.
- Import duties and taxes: customs duty (FTA rate if the CO qualifies), VAT or consumption tax where not recoverable.
- Customs brokerage.
- Inland transport (drayage) to the warehouse.
- Warehousing, if staged.
- Demurrage and detention beyond free time.
- Bank charges: L/C, T/T, FX.
- Lab testing.
- Claims and credit notes (negative).
Incoterm adjustments
Which of these you pay depends on the incoterm. Under FOB you pay everything from the ship's rail; under CIF the supplier's price already contains freight and insurance; under DDP nearly everything. To compare suppliers, list the same lines for each and fill in who pays; the quote that looks 4% cheaper often is not.
Estimated, quoted, invoiced, paid
Landed cost is only exact after the last invoice arrives, which can be months after receipt (demurrage, claims). Track each line with a status — estimated, quoted, invoiced, paid — and a source, and let the unit cost update as lines firm up.
Every Pacifica order carries a Costs box with these lines, each with amount, currency, source (PO, forwarder invoice, broker invoice, ERP) and status; total and landed cost per unit are computed and feed the product page, so prices are comparable across incoterms and suppliers over time.
Questions
Is VAT part of landed cost?
Include it only if your business cannot recover it. Recoverable VAT or consumption tax is a cash-flow item, not a cost.
Should demurrage be included?
Yes — it was incurred to land that lot. Including it also makes the pattern visible across suppliers and lanes.
How do I compare an FOB and a CIF quote?
Add estimated freight and insurance to the FOB quote (or subtract them from the CIF price) and then add the same destination lines to both.
Related
See it on your own orders.
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