Lapasar
Logistics & Fulfilment

Landed Cost

Also known as: Total Landed Cost, Landed Price

Landed cost is the full cost of getting a purchased item to your door — the product price plus freight, insurance, import duty, taxes and handling fees.

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Landed cost answers the question a unit price cannot: what does this item really cost by the time it is usable at our premises? The calculation adds every cost incurred between the supplier's quote and your receiving bay — international and domestic freight, cargo insurance, customs and import duty, sales tax, port and handling charges, brokerage fees and currency conversion costs. Two quotes that look 15% apart on unit price can invert once landed costs are added.

A working formula is: landed cost = product cost + freight + insurance + customs duty + taxes + handling and brokerage fees, divided by the number of units in the shipment for a per-unit figure. Which party pays which leg depends on the agreed Incoterms — an FOB quote leaves most of the journey (and its costs) with the buyer, while a DDP quote builds them into the price.

For Malaysian importers, the main components on top of the supplier's price are import duty (rates vary by HS code under the Customs Duties Order), sales tax under SST on taxable imported goods, and forwarder, port and handling charges at entry points such as Port Klang or Penang. Comparing an overseas quote against a local supplier's price is only meaningful at landed-cost level — the local quote already includes delivery, and buying locally avoids duty, freight and FX exposure entirely for many indirect categories.

Key points

  • Landed cost = product + freight + insurance + duty + taxes + handling, per unit.
  • Incoterms decide who pays which leg — always compare quotes on the same terms.
  • Malaysian imports attract duty by HS code plus SST on taxable goods; classify items correctly before comparing.
  • Compare overseas versus local supplier quotes at landed-cost level, never at unit price.

Example

A Penang manufacturer compares imported safety gloves at RM4.20 a pair against a local supplier at RM4.80. After sea freight, insurance, 20% import duty, SST and forwarder fees, the imported pair lands at RM5.35 — the 'cheaper' overseas quote is 11% more expensive, before counting the six-week lead time.

Frequently asked questions

How do I calculate landed cost?
Add the product cost, international and domestic freight, cargo insurance, customs duty, taxes and handling or brokerage fees for the shipment, then divide by the number of units. The result is the true per-unit cost of the item delivered to your premises.
What is included in landed cost for Malaysian imports?
On top of the supplier's price: freight and insurance, import duty at the rate set for the item's HS code, sales tax under SST where the goods are taxable, and port, forwarder and handling charges. The Incoterms agreed with the supplier determine which of these the buyer pays directly.
Why does landed cost matter when comparing suppliers?
Because unit prices are not comparable when delivery obligations differ. An overseas quote can look cheaper than a local one yet cost more once freight, duty and taxes are added — and a local quote usually already includes delivery. Landed cost puts every quote on the same basis.

Go deeper

Supplier management guideCompare delivered prices on the Lapasar e-commerce store

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