The number that matters is landed cost, not unit price
A quote of $0.42 a unit tells you almost nothing. Freight, duty, clearance, storage and payment terms decide whether the deal works — here is how to build the real number before you commit.
Every first-time importer has the same conversation. A factory quotes a unit price, the price is dramatically better than the UK wholesale price, and the deal looks obvious. Then the goods arrive and the margin has gone somewhere between the port and the warehouse.
The unit price is the smallest part of what you actually pay. Landed cost is the number the decision should be made on: everything it takes to get one sellable unit onto your shelf, in your currency, ready to invoice.
What sits between the quote and your shelf
Build the list before you negotiate, not after. For most food and packaging lines coming into the UK, it looks like this:
- Ex-works or FOB price — what the factory quoted, and which of the two it was. The gap between them is the inland leg and export clearance at origin, and it is not small.
- Ocean or air freight, plus the surcharges that ride with it: bunker adjustment, peak season, port congestion.
- Destination charges — terminal handling, documentation, haulage from the port to your warehouse.
- Duty at the commodity code that actually applies to your product, not the one that sounds closest.
- Import VAT, which you reclaim, but which you fund first.
- Customs clearance and any inspection fees, including the ones that only appear if you are checked.
- Storage from the day it lands to the day it sells — pallets in, pallets out, and the weeks in between.
- Compliance work: labelling, artwork changes, testing, certification.
- Wastage, damage and the units that arrive unsellable.
Do the division at the end, not the start
Add every line above for the whole shipment, then divide by the number of units you can actually sell — not the number you ordered. That is your landed cost. Compare that to your selling price, and only then decide whether the deal was ever real.
A container that halves your unit price and triples your working capital cycle has not made you money. It has moved it.
The three that catch people out
Commodity codes. Duty rates vary sharply between codes that describe near-identical products. Getting the classification wrong is not a rounding error — it changes the arithmetic, and it is your liability as the importer, not the factory's.
Payment terms. Paying 30% up front and 70% against documents means your cash is out for the whole voyage plus the sales cycle. Two identical landed costs with different payment terms are not two identical deals.
Volume assumptions. Freight cost per unit falls with volume, so a spreadsheet built on a full container flatters a first order that will not be one. Model the order you are actually going to place.
What to ask for before you commit
- The Incoterm in writing, not just a price.
- Carton dimensions, units per carton, cartons per pallet, and gross weight — freight is quoted on space and weight, not on your unit count.
- The commodity code, checked against the product as it will actually be presented and labelled.
- A landed-cost figure for the order size you are really placing, and for the one you would place if it works.
None of this makes importing harder than it is. It makes it predictable — which is the difference between a first order and a second one.
Want this run against your own product?
Tell us what you are buying and where from. We will come back with the real numbers.