How to Calculate Landed Cost When Importing From China (and Price for Profit)
Short answer
Landed cost is everything it costs to get one unit into your warehouse ready to sell: product price + packaging + freight + insurance + customs duty + clearance and port fees + inland delivery, divided by units. In the UAE, duty is usually 5% of CIF value, and 5% import VAT is usually recoverable if you are VAT-registered. A common rule of thumb for e-commerce is to keep landed cost at or below 25 to 30% of your retail price, leaving room for marketing, fulfilment, returns and profit.
Key takeaways
- ✓Compare suppliers on landed cost, not factory price.
- ✓Your marketing cost per sale must fit inside the margin.
- ✓Include returns, payment fees and delivery in your unit economics.
- ✓Cash on delivery refusals are a real cost in some markets; include them.
Worked example: 1,000 units to Dubai
| Cost line | Total (AED) | Per unit (AED) |
|---|---|---|
| Product (FOB price) | 18,000 | 18.00 |
| Custom packaging | 2,500 | 2.50 |
| Sea freight and insurance (LCL) | 2,000 | 2.00 |
| CIF value (product + packaging + freight + insurance) | 22,500 | 22.50 |
| Customs duty at 5% of CIF | 1,125 | 1.13 |
| Clearance, port and handling fees | 900 | 0.90 |
| Delivery to your warehouse | 400 | 0.40 |
| Landed cost | 24,925 | 24.93 |
This is an illustrative example; your figures depend on product, volume, route and season. Import VAT (5% on CIF plus duty) is not included because VAT-registered businesses usually recover it.
From landed cost to retail price
| Per unit (AED) | Amount |
|---|---|
| Retail price | 99 |
| Landed cost | 24.93 (25%) |
| Fulfilment and delivery to customer | 15 |
| Payment fees and returns allowance | 7 |
| Marketing cost per sale (target) | 30 |
| Profit before overheads | About 22 |
If your landed cost were AED 45 instead, the same price would leave almost nothing for marketing. That is why sourcing and marketing decisions belong together.
Price with psychology, not just maths
Cost-plus pricing tells you your floor, not your price. Buyers judge price against reference points: competitors, bundles and how premium the brand feels. Read our guide to psychological pricing before you set the number.
How Husbar helps
In China Line we calculate landed cost and target marketing cost per sale before you place an order, so the numbers work from day one. With Husbar's China Line, we find and verify the supplier, negotiate price and terms on your behalf, arrange samples, inspection and shipping, then market the product in the UAE, Saudi Arabia or Pakistan. You own the brand; we do the heavy lifting. Browse the Suppliers Directory or tell us what you want made.
Frequently asked questions
What is landed cost?+
The total cost to get one unit into your warehouse ready to sell: product, packaging, freight, insurance, duty, clearance fees and inland delivery.
What should landed cost be as a percentage of retail price?+
A common rule of thumb for e-commerce is 25 to 30% or less, so there is room for marketing, fulfilment, returns and profit.
Is VAT part of landed cost in the UAE?+
Import VAT is usually recoverable for VAT-registered businesses, so many exclude it. If you are not registered, include it.
How do I reduce landed cost?+
Negotiate price and packaging, ship by sea in fuller loads, size packaging to cut volume, and order in quantities that balance unit price with cash tied up.
Sources
- GCC Common Customs Tariff.
- UAE Federal Tax Authority. VAT on imports.
- Kahneman, D., and Tversky, A. (1979). Prospect theory. Econometrica, 47(2).
Team Husbar
Husbar Editorial
Team Husbar is the strategy, psychology and research team at Husbar, a psychology-led growth agency headquartered in Dubai. Together we have worked with 100+ brands over 10+ years.
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