Landed cost explained: the real cost of importing goods into the UK

The short answer

Landed cost is the total cost of getting a product to your door, ready to sell. It is the supplier's price plus freight, insurance, customs duty, import VAT, clearance and handling charges, and inland delivery. Comparing suppliers on landed cost, rather than unit price, shows which quote is genuinely the best value.

What goes into landed cost

• Product cost. The price you pay the supplier, including tooling, samples and packaging.
• Freight. Sea, air, rail or road transport, plus any fuel or peak-season surcharges.
• Insurance. Cover for loss or damage in transit.
• Customs duty. Calculated from the commodity code, the customs value and the origin of the goods under the UK Global Tariff and any trade agreement that applies.
• Import VAT. Charged on most imports, usually on the value including duty and transport. VAT-registered businesses can often account for it through postponed VAT accounting rather than paying it at the border.
• Clearance and port charges. Customs broker fees, terminal handling and any inspection costs.
• Inland delivery. Moving goods from the port or airport to your warehouse.
• Financing and currency. The cost of paying deposits early and exchange rate movement between order and payment.

How do Incoterms affect landed cost?

Incoterms define which costs and risks sit with the supplier and which sit with you. An ex-works quote leaves almost everything to the buyer, while a delivered-duty-paid quote includes nearly all of it. Two quotes on different Incoterms are not comparable until you convert them to the same basis, which is exactly what a landed cost calculation does.

A simple way to calculate it

1. 1.Start with the unit price and multiply by the order quantity.
2. 2.Add every freight, insurance and handling charge for the shipment.
3. 3.Add customs duty based on the correct commodity code and origin.
4. 4.Add import VAT if you cannot reclaim or postpone it.
5. 5.Add inland delivery and any finance or currency costs.
6. 6.Divide the total by the number of units to find your landed cost per unit.

Use this figure, not the unit price, to set selling prices and protect margin.

What do UK importers need before goods arrive?

You will normally need an EORI number starting with GB to move goods into Great Britain, the correct commodity code for each product, and the commercial documents your customs broker asks for, such as the commercial invoice and packing list. Getting the commodity code right matters, as it decides the duty rate and any controls that apply.

Common mistakes

• Comparing quotes on different Incoterms
• Forgetting surcharges, storage or demurrage when shipments are delayed
• Using the wrong commodity code and paying the wrong duty
• Ignoring currency movement on large orders

If you are choosing between suppliers, combine landed cost with the checks in our supplier due diligence checklist to decide on value and reliability together.

Frequently asked questions

What is the difference between landed cost and unit price?

Unit price is what the supplier charges for the product. Landed cost adds everything needed to get it to you, including freight, insurance, duty, import VAT and handling.

Is import VAT a cost to my business?

For VAT-registered businesses it can usually be reclaimed, and postponed VAT accounting can remove the need to pay it at the border. It still affects cash flow if paid upfront, so include it in your planning.

How can I reduce landed cost?

Consolidate shipments, choose the most suitable transport mode, confirm the correct commodity code, check whether preferential origin rules reduce duty, and negotiate Incoterms that suit your logistics.

Want help comparing suppliers properly?

Refract Global helps UK buyers compare suppliers on a true landed cost basis. Get in touch and tell us what you are importing.