Ask most buyers what a product costs and they quote the unit price. Ask what it costs landed in their warehouse, cleared, and they often cannot say without opening three files.
That gap is where margin goes missing. It is also where most sourcing decisions are made badly, because two quotes that look 8% apart on unit price can be level — or reversed — once everything else is counted.
The full list
At origin
- Unit price at the agreed Incoterm
- Tooling or mould cost, amortised across realistic volume rather than the first order
- Inspection and testing
- Origin handling and export clearance, if your term leaves these with you
Moving it
- Freight
- Insurance
- Terminal handling at both ends
- Demurrage and detention — budget something; the average importer pays it more often than they plan to
At the border
- Duty at the applicable rate, which depends on correct classification and origin
- Any antidumping or countervailing duty on the product and country
- GST or HST, recoverable for most registrants but a genuine cash-flow cost
- Customs brokerage
After the border
- Inland transport
- Warehouse receiving and put-away
- Financing cost of the goods between payment and sale
- FX cost, including the spread you actually pay, not the rate you read
- Defect and shrink allowance based on your own history
A worked example
Two quotes for 10,000 units.
| Supplier A | Supplier B | |
|---|---|---|
| Unit price | $4.10 | $4.45 |
| Incoterm | FOB origin port | FCA origin terminal |
| Unit subtotal | $41,000 | $44,500 |
| Freight and insurance | $4,800 | $3,900 |
| Terminal and handling | $1,150 | $900 |
| Duty at 6.5% | $2,665 | $2,893 |
| Brokerage | $310 | $310 |
| Inland to warehouse | $850 | $850 |
| Defect allowance | 3% ($1,230) | 0.8% ($356) |
| Total landed | $52,005 | $53,709 |
| Per unit | $5.20 | $5.37 |
Supplier A is 8.5% cheaper on unit price and 3.2% cheaper landed. The gap narrows because A's higher defect rate and worse freight terms absorb most of the advantage.
Now change one thing. If A's defect rate is 6% rather than 3% — a single bad lot — A lands at $5.32 and the difference is under 1%. At that point the decision is not about price at all. It is about which supplier you would rather call at 11pm when a customer rejects a shipment.
Where the biggest errors hide
Tooling amortised over a hopeful volume. A $12,000 mould across 10,000 units is $1.20. Across the 40,000 you hope to sell, it is $0.30. Use the order you are actually placing.
Classification taken from the supplier. Your supplier's tariff code is for their export, not your import. Getting the Canadian classification wrong changes your duty and is your liability, not theirs.
FX at the headline rate. The spread and fees on a payment are a real cost. Over a year of orders they are rarely trivial.
Demurrage treated as an exception. It happens. Budget it at your own historical rate rather than at zero.
Make it a standing calculation
The point is not to run this once during a tender. It is to hold landed cost per SKU as a live figure, updated when freight, duty or FX moves, so that a pricing decision is never made against a number that was true last spring.
If you cannot state the landed cost of your top ten SKUs within a minute, that is the first thing worth fixing — before renegotiating anything.