Common mistake: Importers focus only on product price (FOB) and forget total landed cost. Reality: Product cost = only 50-70% of total landed cost. Calculate accurately to maintain profit margins.
Interactive Cost Calculator
Calculate Your Total Landed Cost
Total Landed Cost Formula
TOTAL LANDED COST = Product Cost (FOB) + International Shipping + Insurance + Customs Duties & Taxes + Customs Broker Fees + Inland Transportation + Additional Costs
Understanding Each Cost Component
1. Product Cost (FOB)
50-70% of total
Price from supplier at Korean port (Busan/Incheon)
- FOB: Most common, you arrange shipping
- CIF: Supplier includes freight + insurance
- EXW: Cheapest, you handle everything
2. Shipping Cost
10-20% of total
Transport from Korea to your country
- Ocean FCL: $2,000-$6,000 per container
- Ocean LCL: $50-$150 per CBM
- Air: $4-$8 per kg
3. Insurance
0.5-1.5% of value
Protects against loss/damage during transit
Always recommended, especially for first orders
4. Customs Duty
0-30% (usually 0% with FTA)
Tax on imported goods based on HS code
Korea FTA eliminates most duties to USA, EU, Canada, Australia, UK
5. Customs Broker
$150-$300 per shipment
Files customs entry, pays duties on your behalf
Essential for first-time importers
6. Inland Transport
$200-$1,000
From arrival port to your warehouse
Varies by distance and shipment size
Shipping Method Quick Reference
| Method | Transit | Cost | Best For |
|---|---|---|---|
| Ocean FCL | 14-35 days | $2,000-$6,000 | >15 CBM volume |
| Ocean LCL | 20-40 days | $50-150/CBM | <15 CBM volume |
| Air Freight | 3-7 days | $4-8/kg | Urgent, high-value |
| Express | 2-4 days | $8-15/kg | Samples, <100 kg |
Real-World Examples
Example 1: K-Beauty Skincare (Seoul → Los Angeles)
Product FOB: $6,000
Volume: 8 CBM | Weight: 250 kg
| Product (FOB) | $6,000 | 70.4% |
| Ocean LCL (8 CBM × $150) | $1,200 | 14.1% |
| Insurance (1%) | $60 | 0.7% |
| Customs Duty (KORUS FTA) | $0 | 0% |
| Customs Broker | $250 | 2.9% |
| Inland Transport | $300 | 3.5% |
| Misc. Fees | $480 | 5.6% |
| TOTAL | $8,290 | 100% |
Per Unit: $8.29 | Suggested Retail: $25-30 (3x markup) | Margin: 67-72%
Example 2: Electronics (Busan → New York)
Product FOB: $15,000
Volume: 18 CBM | Weight: 1,200 kg
| Product (FOB) | $15,000 | 75.0% |
| Ocean FCL 20ft | $3,200 | 16.0% |
| Insurance (1%) | $150 | 0.8% |
| Customs Duty (KORUS FTA) | $0 | 0% |
| Customs Broker | $300 | 1.5% |
| Inland Transport | $450 | 2.3% |
| Quality Testing (UL/FCC) | $800 | 4.0% |
| Misc. | $85 | 0.4% |
| TOTAL | $19,985 | 100% |
Per Unit: $39.97 | Suggested Retail: $99-129 | Margin: 60-69%
Cost Optimization Strategies
1. Use FTA Benefits
Save 5-30% on duties
Request Certificate of Origin from supplier ($30-50). Can save thousands on each shipment.
2. Choose Right Container
FCL cheaper if >15 CBM
LCL 15 CBM = $2,250. FCL 20ft = $2,200. Consider ordering more to reach FCL.
3. Avoid Peak Season
Save 30-50% on freight
Ship during low season (Feb-Apr). Rates lowest. Avoid Oct-Dec peak rush.
4. Compare Forwarders
Save 20-30% on shipping
Get 5+ quotes. Same route varies $700+. Annual savings: thousands.
Common Calculation Mistakes
Mistake 1: Using FOB for duty calculation
Wrong: FOB × duty rate
Right: (FOB + freight + insurance) × duty rate
Impact: Under-calculation leads to surprise costs
Mistake 2: Forgetting VAT/GST
EU/Australia/Canada charge 10-27% VAT on (CIF + Duty)
This is a major cost that importers often miss
Mistake 3: Not calculating volumetric weight
Air freight charges by whichever is higher: actual or volumetric weight
Light but bulky products cost more than you think
Key Takeaways
- Product cost = only 50-70% of total landed cost
- Always calculate TOTAL before ordering
- FTA can save 5-30% on duties - don't ignore it
- Get 3-5 freight quotes - prices vary 20-30%
- FCL is cheaper if volume >15 CBM
- Budget 10% contingency for unexpected costs
- Retail price must be 2.5-5x landed cost for viability
Accurate cost calculation = foundation of profitable importing.
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