A supplier might quote US$10 per unit. However, the landed cost per product is rarely US$10 once the goods reach your warehouse.
Freight, handling, clearance and delivery all add to the cost. When one shipment contains several products, you also need to decide how much of those shared costs belongs to each stock keeping unit (SKU).
That is where landed cost per product becomes useful. It gives you a better figure for pricing, margins and supplier comparisons.
What should landed cost per product include?
Landed cost is the total cost of getting an imported product to a point you define. For many businesses, that means their warehouse or fulfilment centre.
Depending on the shipment, it may include:
- Supplier purchase price
- Packaging or export preparation
- Transport within China
- Consolidation and warehouse handling
- International freight
- Cargo insurance
- Customs clearance or brokerage
- Import duty or tariffs where applicable
- Border and government charges
- Destination handling and final delivery
GST, VAT and similar import taxes also matter. However, a registered business may recover these taxes in some countries.
In that case, the tax affects cash flow without necessarily becoming a permanent product cost.
Why mixed shipments need an allocation method
Suppose you import 1,000 compact products and 200 bulky products together. The bulky items may use most of the shipping space.
If you divide freight equally by unit count, the smaller products carry too much of the cost. Meanwhile, the bulky product can look more profitable than it really is.
Instead, allocate each shared cost using the factor that caused it.
| Cost | Useful allocation method |
|---|---|
| LCL sea freight | Volume or chargeable volume |
| Air freight | Chargeable weight |
| Cargo insurance | Goods value |
| Handling charged per carton | Carton count |
| Product testing | Directly to that SKU |
| Import duty or tariff | Directly to that SKU |
| Flat clearance costs | Goods value or another consistent method |
For less-than-container-load (LCL) sea freight, volume often drives the price. Your goods share container space with cargo from other importers.
Forwarders commonly measure that space in CBM, or cubic metres. If one SKU uses 45% of the shipment space, assigning it around 45% of the volume-related cost is usually more realistic.
Air freight works differently because chargeable weight can depend on both actual weight and cargo size. Product-specific testing, special packaging and tariffs should usually stay with the SKU that causes them.
Worked example: China to New Zealand
The same allocation method works internationally. For this example, we will use a New Zealand importer buying three products from China.
Chinese suppliers commonly quote goods in US dollars, so we will start there. For an easy NZ dollar comparison, this example uses US$1 = NZ$1.70.
This exchange rate was reasonable at the time of publication and is used purely for illustration. Actual exchange rates move constantly, so use your real conversion rate when calculating a live order.
| SKU | Units | Goods value | NZ$ comparison | Volume |
|---|---|---|---|---|
| SKU A | 1,000 | US$3,600 | NZ$6,120 | 1.2 CBM |
| SKU B | 400 | US$2,800 | NZ$4,760 | 1.8 CBM |
| SKU C | 200 | US$2,000 | NZ$3,400 | 1.0 CBM |
| Total | 1,600 | US$8,400 | NZ$14,280 | 4.0 CBM |
SKU B represents one-third of the goods value. However, it uses 45% of the shipment volume.
That difference becomes important once we allocate the freight.
Step 1: List the shared shipment costs
Assume the importer expects these additional costs:
| Cost | Amount | Allocation basis |
|---|---|---|
| China consolidation and export handling | NZ$600.00 | Volume |
| International sea freight | NZ$2,400.00 | Volume |
| Cargo insurance | NZ$180.00 | Goods value |
| NZ destination handling and delivery | NZ$900.00 | Volume |
| Broker and administration | NZ$300.00 | Goods value |
| Customs and MPI high-value sea import levy | NZ$118.44 excl. GST | Goods value |
As at September 2026, New Zealand Customs publishes a combined Customs and Ministry for Primary Industries (MPI) levy of NZ$118.44 excluding GST for high-value sea imports.
The current levy structure took effect on 1 April 2026. Government charges can change, so check the current New Zealand Customs rates when budgeting a future shipment.
The example separates recoverable GST from permanent landed cost. Therefore, the levy appears above excluding GST.
Step 2: Allocate the volume-related costs
The volume-related costs total NZ$3,900.
- SKU A uses 30% of the volume, so it receives NZ$1,170.
- SKU B uses 45%, so it receives NZ$1,755.
- SKU C uses 25%, so it receives NZ$975.
SKU B gets the largest allocation because it uses the most shipping space. Unit count does not change that.
This is why carton dimensions matter. You can use our Freight Volume Calculator to calculate CBM before comparing freight options.
Step 3: Allocate the value-related costs
Insurance, broker costs and the Customs/MPI levy total NZ$598.44.
We allocate these charges according to each product’s share of the US$8,400 goods value. Because every SKU uses the same exchange rate, its percentage share remains the same in NZ dollars.
That gives SKU A NZ$256.47, SKU B NZ$199.48 and SKU C NZ$142.49.
Step 4: Calculate the landed cost per product
We can now combine the converted goods value with each SKU’s allocated shared costs.
| SKU | Goods value in NZ$ | Allocated shared costs | Total landed cost | Landed cost per unit |
|---|---|---|---|---|
| SKU A | NZ$6,120.00 | NZ$1,426.47 | NZ$7,546.47 | NZ$7.55 |
| SKU B | NZ$4,760.00 | NZ$1,954.48 | NZ$6,714.48 | NZ$16.79 |
| SKU C | NZ$3,400.00 | NZ$1,117.49 | NZ$4,517.49 | NZ$22.59 |
| Total | NZ$14,280.00 | NZ$4,498.44 | NZ$18,778.44 | — |
SKU B started as a US$7.00 factory-price product. After conversion and its share of logistics costs, the landed cost is about NZ$16.79 per unit.
If you allocated every shared cost by goods value instead, SKU B would carry about NZ$455 less cost, or roughly NZ$1.14 less per unit.
That difference could easily change a pricing decision or make an unprofitable SKU look worthwhile.
What about duty from China to New Zealand?
For this example, all three products qualify for 0% customs duty under the New Zealand-China Free Trade Agreement.
Qualifying Chinese-origin goods generally enter New Zealand duty-free under the FTA. However, buying from a supplier in China does not automatically prove that every product qualifies.
Origin and other FTA requirements still matter. For more on the wider process, see our guide to importing from China to New Zealand.
Keep recoverable GST or VAT separate
Import GST, VAT or similar taxes can create a large cash requirement. However, a registered business may later recover that tax.
For that reason, it helps to keep two numbers. Your landed product cost shows the permanent commercial cost assigned to each SKU.
Your total cash requirement shows everything you may need to fund before and during the import, including recoverable tax.
That distinction applies internationally, although tax rules vary between countries.
How import GST affects the New Zealand example
For a simplified New Zealand calculation, take the NZ$14,280 goods value, NZ$2,400 international freight and NZ$180 insurance.
With NZ$0 duty, the GST calculation base is NZ$16,860. At 15%, that gives NZ$2,529 of import GST.
A GST-registered New Zealand importer can generally claim eligible import GST back when the normal requirements are met.
Therefore, the NZ$2,529 may affect how much cash the order needs. However, it would not generally remain in the permanent product cost after recovery.
For a quick estimate, use our New Zealand Customs Fee Calculator. It can help estimate GST, duty and common Customs or MPI import levies.
Do not simply add 20% to every order
Some importers add 15%, 20% or another fixed percentage to the factory price.
That can help with a very early estimate. However, it is not a reliable landed cost per product calculation.
Compact high-value goods may have relatively low freight costs. In contrast, bulky low-value goods can have a much larger freight percentage.
For a GST-registered New Zealand importer buying qualifying Chinese-origin goods, recoverable GST generally does not remain in the permanent landed cost. Customs duty may also be 0%.
Instead, calculate the actual freight, handling, clearance, levies and delivery costs wherever possible.
Get packing estimates before you order
You cannot estimate freight properly without knowing how the factory plans to pack the goods.
Before placing a larger order, ask for estimated carton dimensions, gross weight, units per carton and total carton quantity.
If the factory will use pallets or timber packaging, confirm those details too. They can change both shipment size and freight cost.
The final figures may change after production. However, realistic packing estimates give you a much better landed-cost calculation than the supplier price alone.
Once final packing data is available, update your calculation before the shipment leaves China.
Compare suppliers on the same basis
A lower factory price does not always produce a lower landed cost.
Before comparing suppliers, check the specification, carton dimensions, weight, quantity and trade terms.
For example, EXW, or Ex Works, means the buyer takes responsibility from the supplier’s premises. FOB, or Free on Board, means the supplier handles the goods through export and loading onto the vessel at the agreed port.
Freight quotes also need to cover the same services. Our China to NZ freight quote guide explains what to compare.
A simple landed cost per product formula
Supplier cost + direct SKU costs + allocated shared costs + applicable duty and border costs = landed cost
Then divide the result by the number of saleable units.
That distinction matters. If you order 1,000 units but expect only 980 to be usable, dividing the total cost by 1,000 makes your margin look slightly better than it really is.
Instead, use the number of units you realistically expect to sell.
Once the shipment arrives, replace estimates with actual invoices. Doing this after each order gives you better data for the next one.
Need help modelling your China supply chain?
Prestige Sourcing helps importers compare sourcing and logistics options before committing to an order.
Our Supply Chain Consulting service can help you review cost assumptions and understand where expenses sit across a mixed-SKU supply chain.
