True Product Cost for Dropshippers: How to Calculate Landed Cost
On this page
The price you see on a supplier listing is almost never what a product actually costs you. By the time a unit reaches your customer, you have also paid for shipping, fees, and sometimes duties. That all-in number is your landed cost, and it is the only figure you should price against. This guide explains what landed cost includes, why the sticker price misleads, and how to calculate it with a simple worked example.
What is landed cost?
Landed cost is the true, all-in cost to get one unit into your customer's hands. It is the product price plus shipping plus every per-unit fee, not just the number on the supplier's listing. Two sellers buying the "same" $6 product can have very different landed costs once shipping, duties, and payment fees are counted, and that difference decides who actually makes money.
What landed cost includes
A complete landed cost adds up every cost between the supplier's warehouse and your customer's door:
- Product price: the per-unit price on the listing.
- Shipping and freight: the cost to move the goods. For dropshipping this is the per-order shipping fee. For bulk orders it is the total freight spread across the number of units.
- Duties and customs: import taxes that apply when goods cross a border, usually a percentage of the declared value. These mainly hit bulk and cross-border imports; small parcels shipped direct to the customer often fall under de minimis thresholds and skip per-order duty.
- Payment and transaction fees: the processor's cut on each order, plus any currency conversion spread.
- Packaging and handling: inserts, custom boxes, or an agent's handling fee, charged per unit.
Why the sticker price misleads
The sticker price is the most visible cost, so it is the one sellers anchor to, and it is usually the smallest piece. A $6 product can easily carry $2.50 in shipping, $0.60 in duties, and $0.30 in payment fees, which makes the real landed cost $9.40, more than 50 percent above the sticker. Price a markup off $6 and your margin quietly disappears. Price off $9.40 and it holds.
How to calculate landed cost
The formula spreads shared costs across the batch and adds per-unit costs directly:
Landed cost per unit = product price + (shipping + duties + other shared costs) / units + per-unit fees
Worked example for a 100-unit order:
| Cost | Amount | Per unit (100 units) |
|---|---|---|
| Product price | $6.00 each | $6.00 |
| Freight (whole batch) | $180.00 | $1.80 |
| Duties (whole batch) | $60.00 | $0.60 |
| Payment fee (per unit) | $0.30 | $0.30 |
| Landed cost per unit | $8.70 |
The same $6 product really costs $8.70 to land. Running that math by hand for every supplier and order size gets tedious fast, so you can work out the true landed cost per unit in the free shipping and COGS calculator instead.
Dropshipping versus bulk: where the cost hides
The cost structure changes with how you source. In dropshipping you pay per-order shipping on every single sale, so shipping is already a per-unit cost and the trap is forgetting to add it to the product price before you set a markup. In bulk sourcing from a supplier like Alibaba, the freight and duties are large up front but spread thin across many units, which lowers landed cost per unit but ties up cash and adds minimum order quantities. This is exactly the tradeoff at the center of comparing CJdropshipping and AliExpress, and the reason to move a proven winner to Alibaba is almost always a better landed cost at volume.
Price against landed cost, not sticker cost
Once you know the landed cost, set your selling price off that number, never the listing price. If your landed cost is $8.70 and you want a 50 percent margin, you need a selling price around $17.40, not the $12 you might have picked if you anchored to the $6 sticker. Drop your real landed cost and target margin into the profit margin calculator to see the price each margin requires before you list anything.
How Importify helps
Importify's pricing rules apply your markup to the supplier price as you import from 25+ marketplaces, with a preview before publishing, so you are never guessing at the storefront price. Automated currency conversion turns international supplier prices into your store currency at up-to-date rates, which removes one of the hidden gaps between sticker cost and landed cost. Add your shipping and fees on top using the calculator above, and the markup you set in Importify will sit on a number that reflects what the product truly costs.
References
Frequently Asked Questions
What is landed cost?
Landed cost is the true, all-in cost to get one unit to your customer: the product price plus shipping and every per-unit fee. It is almost always higher than the supplier's sticker price.
What is included in landed cost?
Product price, shipping or freight, duties and customs, payment and currency-conversion fees, and any packaging or handling charges. Shared costs like freight are spread across the number of units in the order.
How do you calculate landed cost?
Add the product price, the shared shipping and duties divided by the number of units, and any per-unit fees. For a $6 product with $1.80 freight, $0.60 duty, and $0.30 in fees per unit, the landed cost is $8.70.
Why is landed cost higher than the product price?
The sticker price is only the most visible cost. Shipping, duties, and payment fees often add 30 to 60 percent on top, so the real cost to land a unit is well above the listing price.
Should I price off landed cost or the sticker price?
Always price off landed cost. Setting a markup on the sticker price ignores shipping and fees and quietly erases your margin. Apply your target margin to the full landed cost instead.