How to Calculate Landed Cost
Every line item between the factory quotation and the true cost per unit on your shelf.
Landed cost is the total cost of one unit of your product, delivered into your warehouse in Israel, ready to sell. It is the only number worth using to compare suppliers — and it is almost never the number on the factory quotation.
The formula, in plain terms
Landed cost per unit = (all costs from the factory floor to your warehouse) ÷ (number of saleable units received).
The second half of that sentence matters. If 3% of the shipment arrives damaged, your landed cost per saleable unit rises by more than 3%, because you paid to ship the damaged units too.
Costs at the factory
- Product price (confirm the Incoterm — EXW, FOB and CIF are not comparable)
- Tooling, moulds and setup charges
- Samples and pre-production samples
- Packaging, cartons and labelling
- Inland transport from factory to port of loading
- Inspection fees
Costs in transit
Freight is charged on whichever is greater, weight or volume. This is why carton dimensions can matter as much as unit price: a supplier whose packing is 20% less efficient costs you 20% more freight for identical goods.
- Ocean or air freight
- Origin and destination terminal handling
- Consolidation charges, where goods from several suppliers are combined
- Cargo insurance
Costs at the Israeli border
The HS classification drives both the duty rate and, frequently, the regulatory requirements. Getting it wrong is expensive in both directions.
- Customs duty, determined by the HS classification of the product
- Purchase tax, where applicable to the category
- VAT (recoverable for a registered business, but it still affects cash flow)
- Standards, testing and certification costs
- Customs clearance and brokerage
- Port charges, and storage or demurrage where release is delayed
Costs in Israel
- Container unloading
- Storage
- Delivery to your warehouse, shops or customers
- Repacking or relabelling, where required
A worked example of the trap
Supplier A quotes $4.10 FOB. Supplier B quotes $3.78 FOB — 8% cheaper. Supplier B’s cartons hold 20 units instead of 30, so freight per unit rises. Supplier B uses a different material, which changes the duty classification. Supplier B has no existing test report, so testing must be paid for and waited on.
Delivered into an Israeli warehouse, Supplier B is the more expensive product and arrives six weeks later. The quotation comparison was never the real comparison.
What to do with the number
Once you have a landed cost per saleable unit, you can work backwards: what price must you sell at, what margin does that leave, and does the order still make commercial sense at the quantity the factory requires?
If the answer is no, you have saved yourself an import. That is a good outcome, and it is one of the more useful things a feasibility check produces.