Business Glossary
What Is UK Landed Cost?
Landed cost is the total cost of a product arriving at your premises including purchase price, freight, import duty, port handling, insurance, and domestic delivery. Importers who only use purchase price systematically overstate gross margin.
The Formula
Landed Cost = Purchase Price + Freight + Import Duty + Port Charges + Insurance + Domestic Delivery
Worked Example — UK SME
A UK importer buys a product for £12.00. Freight £1.40, import duty (12%) £1.44, port handling £0.35, insurance £0.15, domestic delivery £0.80. Landed cost = £16.14. At £24 selling price, true gross margin is 32.8% — not 50%.
UK Benchmark
📊 For most UK importers, landed cost runs 25–45% higher than ex-works purchase price. Missing these costs overstates gross margin by 8–15 percentage points.
Common Questions
What UK import duty rates apply?
Rates vary by product and country. Check the UK Global Tariff on GOV.UK using your HS commodity code. Ranges from 0% on electronics to 35% on some food products.
How has Brexit affected landed costs?
Post-Brexit, goods from the EU now attract UK tariffs for many categories and require customs declarations that previously did not exist, adding 5–15% to landed costs.
How do I calculate landed cost per unit?
Get shipment freight cost, divide by units, add import duty, add port handling per unit, add domestic delivery per unit. Review quarterly as freight rates change significantly.
Related terms