What Is Landed Cost? A Guide for Amazon FBA Importers

Landed cost is the total price of getting your product from the factory floor to a specific destination. For Amazon FBA sellers, that destination is Amazon's fulfillment center. It includes everything: the product itself, shipping, insurance, customs duties, brokerage fees, and any handling along the way.

The reason it matters is simple. If you're making sourcing, pricing, or inventory decisions based on your FOB cost (what you pay the factory), you're working with maybe 40-60% of your actual costs. The rest is invisible until it shows up as cash leaving your account.

The components of landed cost

Landed cost breaks down into five categories. Each one adds to your per-unit cost between the factory and Amazon's warehouse.

1. Product cost (FOB). FOB stands for Free On Board. It's the price your supplier quotes for the product, packaged and loaded onto a container at the port of origin. This is the number most sellers know. A silicone kitchen spatula might be $6.00 FOB Shenzhen. That means the supplier handles everything up to the port. After that, it's your responsibility.

2. Freight. Getting a container from Shenzhen to Long Beach takes about 32 days by ocean. The cost depends on your shipment size, the route, and current rates. A full 40-foot container might cost $3,000-5,000 depending on the season. Allocated across 2,000 units, that's $1.50-2.50 per unit. Air freight is 5-8x more expensive but gets there in a week. Most FBA sellers ship by ocean for bulk replenishment and air freight only for emergencies.

The allocation math matters here. Freight is a per-container cost, not a per-unit cost. If you ship 2,000 units in a container, each unit absorbs $1.50. If you ship 500 units in the same container (because you're testing a new product), each unit absorbs $6.00. The product didn't change. The cost per unit quadrupled because of the allocation.

3. Customs duties. When your shipment arrives at a US port, you owe import duties to the federal government. How much depends on your product's HS code (a classification number that maps to a specific duty rate) and the country of origin.

For products from China, duties can stack: a base MFN rate plus Section 301 tariffs plus the Section 122 global surcharge. A product with a 3.4% base rate might actually owe 43.4% when all layers combine. For a detailed breakdown of how tariff stacking works, see the separate guide.

For products from Vietnam, India, or Mexico, you avoid Section 301 (which is China-only), though the Section 122 global surcharge (15%) still applies to all countries. This is why sourcing country matters so much for landed cost. You can compare countries side by side to see the difference.

4. Customs brokerage. A customs broker files the entry paperwork with CBP (Customs and Border Protection), classifies your product, and arranges for duty payment. Broker fees vary: a flat fee of $150-300 per entry is common for standard shipments. Allocated across 2,000 units, that's $0.08-0.15 per unit. Some brokers charge more for complex classifications or if your shipment has issues at inspection.

5. Insurance and handling. Marine cargo insurance typically costs 0.3-0.5% of the shipment value. Some sellers skip it. Some freight forwarders include it. There may also be drayage (trucking from the port to a warehouse or Amazon FC), terminal handling charges, and ISF filing fees. These are smaller line items but they add up, usually another $0.10-0.30 per unit.

The math nobody does (but should)

Here's a real example. A beginner FBA seller using the common "3X rule": buy at $5, sell at $15, assume the middle $5 covers Amazon fees and $5 is profit. That rule was designed for domestic sourcing (retail arbitrage, wholesale). It completely ignores freight, duties, brokerage, and inbound placement fees.

Running the numbers on a $5 FOB product from China at $15 selling price:

FOB cost: $5.00
Ocean freight (allocated): $0.60
Duties (MFN + Section 301 + Section 122): ~$2.17
Customs brokerage (allocated): $0.20
Amazon referral fee (15%): $2.25
FBA fulfillment: $3.95
Storage: $0.30
Total cost: $14.47
True profit: $0.53 per unit
True margin: 3.5%

The 3X rule predicted $5.00 profit (33% margin). The real number is $0.53 (3.5%). The $4.47 gap is landed cost that the rule ignores.

Another example from the other end. A seller sourcing silicone kitchen accessories from Guangdong figured their margin was around 60%: $24.99 selling price minus $6.00 FOB cost minus $3.75 Amazon referral fee. When they ran the complete landed cost, including ocean freight ($1.10/unit), the MFN duty at 3.4%, Section 301 at 25%, the Section 122 surcharge at 15%, customs brokerage, FBA fulfillment ($4.75), and monthly storage, true margin was 22%. They'd been making sourcing decisions based on numbers that were off by nearly 40 percentage points.

Both of these cases are common. Sellers consistently underestimate total landed cost by 15-40%.

Landed cost vs. COGS vs. all-in cost

These terms get mixed up a lot.

FOB cost is what you pay the factory. Just the product.

Landed cost is FOB plus everything to get it to the destination (freight, duties, brokerage, insurance). For FBA sellers, "landed" usually means "at Amazon's warehouse door."

COGS (Cost of Goods Sold) technically includes landed cost, but some sellers use it loosely to mean just FOB, which creates confusion.

All-in cost (or true cost) is landed cost plus Amazon's fees: referral, fulfillment, storage, inbound placement. This is the number you subtract from your selling price to get your actual profit.

When someone says "my product cost is $6," ask whether that's FOB, landed, or all-in. The answer changes the margin calculation dramatically.

FOB vs. DDP: who handles what

This is where Incoterms come in. The two most common for FBA sellers:

FOB (Free On Board): The supplier delivers the product to the port of origin. You're responsible for everything after that: ocean freight, insurance, customs clearance, duties, and domestic transport to Amazon's warehouse. Most FBA sellers use FOB because it gives you control over shipping costs and customs.

DDP (Delivered Duty Paid): The supplier handles everything, including freight and customs duties, and delivers to your specified address. Sounds simpler, and it is. But suppliers build the cost into the unit price, often with a markup. One seller found that switching from FOB to DDP increased their per-unit cost by 15%, while the actual duty was only 11%. The supplier was charging a 4% premium for handling customs. Knowing your own duty rate lets you negotiate from a position of knowledge.

If you're using DDP, you still need to know your landed cost. You're paying it either way; the question is whether you're paying it transparently (FOB) or hidden in the unit price with a supplier markup (DDP).

How to calculate your landed cost

The short version: add up every cost between the factory and Amazon's warehouse, then divide by the number of units.

The practical version: use a tool that does it for you with real data. The MarginStack calculator pulls MFN duty rates from the USITC database, applies Section 301 and Section 122 surcharges automatically based on your HS code and origin country, estimates freight, and adds Amazon's 2026 fees. You put in your product details and selling price, and it shows you the complete cost waterfall from factory to margin.

You can also do it manually in a spreadsheet. The components are:

FOB cost per unit
Freight cost per container, divided by units in that container
Duty rate (look up your HS code at hts.usitc.gov, then check if Section 301 or Section 122 applies)
Duty amount: FOB cost x combined duty rate
Brokerage fee, divided by units in the shipment
Insurance: typically 0.3-0.5% of shipment value

Sum those up and you have your landed cost per unit. Add Amazon's fees (referral, fulfillment, storage, inbound placement) to get your all-in cost. Subtract from selling price for true margin.

The spreadsheet approach works, but it breaks every time a tariff rate changes or Amazon updates their fee schedule. That's the problem MarginStack was built to solve: keeping the calculation current without manual maintenance.

The biggest landed cost mistakes

Mistake 1: Using the wrong HS code. Everything flows from this. A leather tool pouch classified as "leather goods" at 25% duty could be reclassified as "occupational safety equipment" at 5%. Same product. Different code. One seller saved over $9,000 per quarter just by getting the classification right.

Mistake 2: Ignoring tariff stacking. Googling "duty rate for [product]" gives you the MFN rate. That is one layer out of two or three. Since Feb 2026, the Section 122 global surcharge adds 15% to imports from every country, and China-origin goods still face Section 301 on top of that. See the tariff stacking guide.

Mistake 3: Not recalculating when rates change. A private label seller's best-selling product went from 31% net margin to roughly 12% after the 2025 tariff escalation. They hadn't recalculated their landed cost when the new rates kicked in. The old rate was baked into a 2023 spreadsheet. They only caught it when they reconciled their quarterly P&L and noticed their bank balance declining despite stable Amazon sales. By then, they'd shipped three containers at the wrong assumed margin.

Mistake 4: Estimating freight instead of allocating it. "Shipping costs about $3,000" means nothing for margin calculations until you divide by the actual number of units in that shipment. The per-unit freight cost varies by 4-5x depending on how many units you ship.

If you sell imported products on Amazon, landed cost is the number that determines whether your business makes money. Not your FOB price, not your selling price, not Amazon's fee estimate. The gap between what sellers think their costs are and what they actually are is consistently 15-40 percentage points. Running the real numbers is 60 seconds of work that can save months of selling at a loss.

Calculate your true landed cost with MarginStack.