What a landed cost actually includes
Most cost comparisons between two factories are wrong before they start, because they compare the wrong number.
· Sourcing & Supply Chain Lead
A supplier gives you a unit price. It is the cleanest number in the whole exercise and it is the one people build decisions on. It is also, on a typical consumer goods import, somewhere between 60% and 80% of what the unit will actually cost you by the time it is in your warehouse.
The gap is not exotic. It is freight, duty, insurance, inspection, payment terms and the components the factory quoted separately because you asked for a price on the product. Each is knowable in advance. Together they are the difference between a sourcing decision and a guess.
The items people miss most often, in the order they cost the most: tooling amortised over the wrong volume; secondary packaging quoted per set rather than per unit; inspection and rework budgeted at zero; and the working capital cost of 60-day payment terms, which is real money even when nobody books it.
The practical fix is a should-cost model built before you ask for a quote, not after. It changes the conversation: you are no longer asking what the factory would like to charge, you are asking why their number differs from yours. That is a different negotiation.
We built a calculator that does the arithmetic for a single SKU. It will not replace the model, but it will show you the shape of your own number in about two minutes.
Open the landed cost calculator