How to Calculate Landed Cost for Imported Clothing (2026 Formula)

August 20, 202612 min readBy Essty Garment

The factory quote is never the real cost. By the time a garment lands in your warehouse, freight, insurance, duties, and handling fees have stacked on top of the FOB price. Misjudge landed cost and you either price too low (lose money) or too high (lose sales).

Here is the exact 2026 formula, with a worked example you can copy.

The Landed Cost Formula

Landed Cost = FOB Price + International Freight + Insurance + Import Duty + VAT/GST + Brokerage & Fees + Last-Mile Delivery

Calculate per unit for pricing, or per shipment for cash-flow planning. Both use the same components.

Component Breakdown

Component	What it is	Typical range
FOB price	Factory price, goods on board at origin port	Quoted per piece
International freight	Sea/air to your country	$0.30-$1.50/pc by sea
Insurance	Cargo coverage	~0.3% of goods value
Import duty	Tariff on apparel	0-32% by country/HS code
VAT/GST	Consumption tax	0-20% (some recoverable)
Brokerage & fees	Customs broker, handling	$50-$200/shipment
Last-mile	Port to your warehouse	$0.10-$0.50/pc

Worked Example: 500 Dresses to the US

FOB: $9.50/pc × 500 = $4,750
Sea freight (LCL): $420 total → $0.84/pc
Insurance: 0.3% × $4,750 = $14 → $0.03/pc
US duty (HTS 6104, 32% ad valorem*): $4,750 × 32% = $1,520 → $3.04/pc
No US federal VAT; state sales tax applies at sale, not import
Brokerage: $120 → $0.24/pc
Last-mile: $0.30/pc

Landed cost per dress = $9.50 + $0.84 + $0.03 + $3.04 + $0.24 + $0.30 = $13.95

*Note: US apparel duties are high and vary sharply by category (woven vs knit, gender, fiber). Always confirm the exact HTS code — a misclassification can double your duty.

Why Landed Cost Matters More Than FOB

A factory quoting $6.00 FOB in China vs $7.50 in Vietnam means nothing until you compare landed cost. Vietnam's lower US duty (under trade programs) can make the higher FOB the cheaper landed option. Always compare landed, never FOB.

Tip: Build a simple spreadsheet with these seven rows. Change one input (freight, duty rate, order size) and watch landed cost move — it's the single most useful financial model a clothing importer can own.

Hidden Costs to Flag

Currency fluctuation — FOB is often in USD; your home costs may not be.
Storage & demurrage — delays at port incur daily fees.
Testing & compliance — CPSIA, REACH, or label testing can add $200-$800 per style.

Frequently Asked Questions

Is duty calculated on FOB or freight?

Usually on the customs value, which is typically FOB + freight + insurance (CIF). Confirm your country's basis — it changes the duty number.

Can I recover the VAT?

If you're a registered business in a VAT country (EU, UK, AU), import VAT is often recoverable as input tax. You pay it forward then reclaim it — it shouldn't be a permanent cost.

Why does my landed cost vary by shipment?

Freight rates swing with season and fuel; duty depends on the HS code you (or your broker) declare. Two identical orders can land at different costs if freight or classification differs.