Ask three sellers what a SKU costs them and you get three different numbers, all of them wrong in the same direction. One quotes the supplier's invoice price. One adds freight and stops. One adds freight, duty and prep, then forgets that the entry fee and the drayage bill were the same dollars whether the container held 300 units or 3,000.
Landed cost is the number that ends all three arguments: what one sellable unit costs you, sitting on an Amazon shelf, ready to be picked. Not what the factory charged. Not what the freight forwarder quoted. What it cost to get one unit to the place where it can be sold.
The gap is not small. In the worked example further down, a $6.20 invoice price becomes $9.80 landed — 58% above the number most sellers carry in their heads when they decide whether a deal is worth doing. Get that wrong and every downstream decision (bid price, sell price, reorder quantity, whether to chase the deal at all) is wrong by the same margin. It is the single most common way sellers miscalculate their numbers and only find out two purchase orders later. If you are buying branded goods to resell rather than building your own label, the Amazon wholesale guide covers how those deals get sourced; this piece is about what they actually cost once they arrive.
The eleven lines between the factory and the FBA shelf
Every unit picks up cost in the same order, and the order matters, because each line is calculated on the ones before it. Insurance is a percentage of goods plus freight. Duty is a percentage of customs value. Prep is per unit but billed against per-carton receiving. Miss the sequence and you double-count or drop a line entirely.
Supplier unit price, at whatever point the Incoterm hands the goods over
Origin charges and export clearance, if your Incoterm leaves them with you
International freight
Cargo insurance
Duty at your HTS rate
Customs brokerage and federal entry fees
Drayage or CFS delivery from the port to the prep center
Receiving and prep labor
Prep materials — bags, labels, cartons, dunnage
Storage between arrival and the FBA shipment leaving
Outbound freight into Amazon
Eleven lines, plus one reserve for the units that never make it to a shelf. We will get to that one.
Line 1: the invoice price, and the three letters that decide what it covers
The unit price on a supplier's proforma means nothing on its own. It means something only next to the Incoterm, because that three-letter code is what says where the seller's obligation ends and your bill starts.
EXW and FOB on the same SKU are not the same price. Under EXW you are buying goods sitting in a factory in Ningbo, and everything after the loading dock — inland trucking, export clearance, terminal handling — lands on your invoice. Under FOB the same supplier has absorbed all of it and put the goods on the vessel. A supplier quoting EXW $5.90 against a competitor's FOB $6.20 is usually the more expensive supplier once the origin charges arrive.
The same code also decides who is carrying the risk when a container goes over the side, which is a different question from who is paying the freight, and the one that sellers confuse most often. Our complete Incoterms guide walks the whole alphabet; if you just need to settle one code on one quote, the per-term reference gives you cost and risk transfer side by side.
Practical rule: normalize every supplier quote to the same Incoterm before you compare them. Comparing an EXW price to an FOB price is comparing a subtotal to a total.
Lines 2-4: freight, and the three ways it outgrows the quote
Freight is the line with the widest spread between quoted and invoiced, and it moves for three structural reasons rather than because anyone lied to you.
Billable weight is not your weight
Parcel and air carriers bill on the greater of actual weight and dimensional weight, and the divisor they use varies by carrier and service. A light, bulky SKU can be billed at two or three times its scale weight, which is why cartons that are 20% too big are one of the most expensive packaging decisions available. Run the numbers on your actual carton before you commit to it — the dimensional weight calculator compares UPS, FedEx, DHL, USPS and IATA divisors on the same parcel.
Density decides your LTL class
Domestic LTL prices off NMFC freight class, and since the NMFTA's 2025 restructure most commodities are classed straight off density. A pallet that comes in at 9 lbs/ft³ and one at 13 lbs/ft³ are different classes and materially different rates for the same lane. The freight class calculator gives you the density and the class from dimensions and weight, which is also the fastest way to check whether a carrier reclassed you fairly on an invoice.
For ocean, the equivalent question is whether you are paying for air. LCL bills by the cubic meter and FCL bills by the box, so the honest comparison is cost per unit at your actual fill rate, not the headline rate. A container load plan will tell you whether your cartons fit 1,180 units or 1,340 units into the same 40-footer — which is a 12% swing on the freight line for no extra spend.
Surcharges arrive after the rate is agreed
The rate you agreed is a base. Terminal handling, ISF filing, documentation, bunker adjustment and the newer environmental charges are all billed on top, and some of them appear weeks after the goods have moved. EU-bound and EU-origin lanes now carry a carbon component that is entirely legitimate and frequently miscalculated on the invoice — we covered how to verify the EU ETS surcharge line by line, because it is one of the few surcharges you can actually recompute yourself and challenge.
Cargo insurance belongs here too, and it is the cheapest line in the entire model — typically a fraction of a percent of goods plus freight, often bounded by a minimum premium of a few tens of dollars. Sellers skip it because it is small. It is small precisely because the events it covers are rare and ruinous, and the cargo claims playbook exists because carrier liability limits will not make you whole without it. Budget it as a line. It is rounding error until the day it isn't.
Lines 5-6: duty, brokerage and the fees nobody quotes
Duty is ad valorem — a percentage of customs value — so it scales with your goods and, in practice, moves with your classification rather than your negotiation. The HTS code is the whole game, and it is your legal responsibility rather than your broker's, whatever the broker's invoice implies.
Brokerage and federal entry fees are the opposite shape: largely fixed per entry. Your broker's fee, the entry filing, the bond, the ISF — those cost roughly the same on 300 units as on 3,000. On a small first order they can be the second-largest line in the model after the goods themselves.
If any part of your flow goes the other way, into the EU as low-value B2C parcels, the 2026 import reform changes the arithmetic in a way that catches sellers who built their numbers on the old de minimis assumptions. The IOSS calculator estimates destination-rate import VAT plus the new flat per-parcel customs duty, which is the only honest way to price a European channel right now.
Lines 7-9: prep, the smallest line with the widest spread
Prep is where the model usually breaks, because prep is quoted as one number and billed as six.
Amazon ended its FBA prep and labeling services, so a unit now arrives compliant or it does not get received — which converts prep from an optional convenience into a mandatory cost line with a hard specification behind it. What that specification actually demands per unit (FNSKU placement, poly bag and suffocation warnings, bundle labeling, expiration dating, carton limits) is in the 2026 prep requirements checklist, and it is worth reading before you accept a per-unit quote, because the quote is only meaningful against a defined scope of work.
A headline of "45¢ a unit" almost never survives contact with an invoice. Receiving is usually billed per carton or per pallet. Poly bags, FNSKU labels, cartons, dunnage and tape are materials, often passed through at cost plus a margin. Unloading a floor-loaded container is its own line and a large one. Anything non-standard — a bundle, an oversize, a fragile item needing extra protection — carries an upcharge. We took a quoted number apart line by line in prep center pricing decoded; the short version is that quoted-to-actual of 1.5x to 2x is normal rather than exceptional, and it is knowable in advance if you ask for the full schedule instead of the headline.
Ask for the rate card in writing, with receiving, materials, unloading and upcharges named separately, before you ship. A prep partner who will not put that on paper has told you what the relationship is going to look like. The 20-point due diligence checklist is the rest of that conversation.
Where the prep center sits also lands in this model twice — once as inbound drayage from your port of entry, once as the outbound leg to the fulfillment centers Amazon assigns you. The trade-off between a sales-tax-free state and a short drayage from your supplier's usual port is a real one with real dollars on both sides, and we ran the comparison in sales-tax-free states vs. near your supplier.
Lines 10-11, and the reserve
Storage between arrival and the FBA shipment leaving is usually small and usually forgotten. It stops being small the moment a shipment sits — an Amazon appointment that slips, a restock limit, a Q4 backlog. Price it at your actual dwell, not your intended dwell.
Outbound freight into Amazon is the last line, and it is the one most affected by how well the prep center cubes your cartons onto pallets.
Then the reserve. Some percentage of what you bought will never be sold: damaged in transit, lost between the carrier and the prep center, received short, miscounted, or shrunk somewhere in a warehouse you have never visited. A unit that does not sell still carries its full landed cost, so the reserve is not a rounding adjustment — it is a direct multiplier on every other line.
Two of our most-read pieces exist because this line keeps materializing: what to do when a prep center loses your inventory, and the broader how to protect your cargo and your money in international shipping for everything that happens before the goods reach a domestic warehouse. Read both before you need them rather than after.
Note that some categories carry cost lines this eleven-line model does not contain at all — cold chain, hazmat, and anything with a live or perishable component. If that is your product, the model is a starting point rather than a complete picture; our guide to shipping live animals is an example of how much extra regulatory and handling cost a special category can bring.
A worked example: 1,000 units of a $6.20 SKU
Consumer goods SKU, 1.2 lbs, 0.35 ft³ per unit. 1,000 units bought FOB Ningbo at $6.20. Ocean LCL to Savannah, prep in Georgia, then into FBA.
Goods, 1,000 units at $6.20 FOB: $6,200
Origin charges and export clearance: $0 — covered by the FOB term
Ocean LCL, 10 CBM at $95: $950
Destination terminal, ISF and documentation: $450
Cargo insurance at minimum premium: $30
Duty at 4.2% of customs value: $260
Customs brokerage and federal entry fees: $175
CFS delivery to the prep center: $450
Prep labor — receive, poly bag, FNSKU, case pack: $610
Prep materials — bags, labels, cartons, dunnage: $250
Storage, 10 days: $40
Outbound freight into FBA: $380
Total: $9,795, or $9.80 per unit landed.
The invoice said $6.20. The shelf says $9.80. Everything between those two numbers is the part of the business that does not appear in any supplier negotiation.
Where Amazon's cut belongs — and why it is not landed cost
Referral fees and FBA fulfillment fees are not landed cost. They come off the sale price, not onto the purchase price, and keeping them on separate sides of the equation is what makes the model usable.
Continuing the example, at a $24.99 sale price, a 15% referral fee, and a fulfillment fee of $5.14 for the size tier:
Sale price: $24.99
Referral fee at 15%: −$3.75
FBA fulfillment fee: −$5.14
Landed cost: −$9.80
Profit per unit: $6.30 — a 25% margin and a 64% return on landed cost
Now run the same calculation with the invoice price instead of the landed cost, which is what most sellers are doing when they eyeball a deal: $24.99 − $3.75 − $5.14 − $6.20 = $9.90. That version of the deal shows 40% margins and overstates the real profit by 57%.
Both numbers are arithmetic. Only one of them is true, and the difference is entirely in lines 2 through 11. Plug your own sale price, referral rate and size-tier fee into the FBA profit calculator with landed cost rather than invoice cost in the cost field, and the answer you get is the one your bank account will confirm in ninety days.
The order-size trap: fixed lines do not shrink
Here is the part that breaks first orders specifically.
Of the $9,795 above, $1,075 is fixed per shipment rather than per unit: the destination terminal and documentation charges, the brokerage and entry fees, the CFS delivery. Those three lines cost the same whether the shipment holds 1,000 units or 300.
At 1,000 units, that $1,075 is $1.08 per unit. At 300 units it is $3.58 per unit. Same SKU, same supplier, same lane, and a landed cost that is two and a half dollars higher for no reason other than order size.
This is why a test order almost always looks unprofitable and why the conclusion sellers draw from it — that the SKU does not work — is frequently wrong. Model the test order and the reorder separately. Decide on the reorder economics, and treat the first order's inflated per-unit cost as the price of the test rather than as evidence about the product.
The same logic runs the other way on shared listings. When several sellers are competing on one ASIN, price floors are set by whoever has the lowest landed cost, not the lowest invoice price — which is usually the seller who consolidated freight and amortized the fixed lines properly. Our piece on why brands let several sellers share a listing is the strategic half of this; landed cost is the arithmetic half, and it decides whether you can survive there at all.
How to pin the number down before you wire the deposit
Landed cost is knowable in advance. Every line above can be quoted before you commit money, and all of them should be.
Normalize supplier quotes to one Incoterm, then compare
Get the freight quote with surcharges itemized, not as an all-in figure
Confirm your HTS classification, and get duty and entry fees from your broker in writing
Get the prep rate card in full — receiving, materials, unloading, upcharges — not a per-unit headline
Price the outbound leg into FBA with the prep center, not after the fact
Add a reserve for shrinkage and damage, sized to your actual history
Divide by the order quantity you will actually place, not the one you hope to place later
The lines you cannot quote yourself are the ones a prep partner has to answer, which is a good reason to ask three of them the same set of questions at once. You can browse prep centers by what they actually do — the ones handling FNSKU labeling and shipping into FBA, the ones equipped for container unloading if you are arriving floor-loaded, or the ones offering pallet storage if your dwell time is real. Verified locations are the profiles a real owner has claimed and maintains.
If it is easier to describe the shipment once and let providers respond with their own numbers, tell us what you are moving and the quotes come back against your actual cargo. For freight and customs legs the same applies through transport providers, and for longer dwell there are warehouses with the full service catalog attached. If you are earlier than that and still mapping the flow, start here.
Frequently asked questions
What is landed cost per unit?
Landed cost per unit is the total cost of getting one sellable unit to the point where it can be sold, divided by the number of sellable units. It includes the goods, freight, insurance, duty, customs fees, inland delivery, prep labor and materials, storage and the final leg into the fulfillment center. It excludes marketplace fees, which come off the sale price instead.
Do Amazon referral and FBA fees count as landed cost?
No. They are deducted from revenue, not added to inventory cost. Mixing them into landed cost makes the number unusable for purchasing decisions, because the same unit would have a different "cost" depending on which channel you sold it through. Keep landed cost on the purchase side and marketplace fees on the sale side.
How do I estimate landed cost before I have real quotes?
Use your last comparable shipment as a template and scale the variable lines by value and volume. If you have no history, budget freight, duty and prep as a combined 45-60% of the FOB goods value for a typical imported consumer good, then replace each estimate with a real quote as it arrives. The estimate is for screening deals, not for committing to them.
Why is my first order's landed cost so much higher per unit?
Because a meaningful share of the cost is fixed per shipment rather than per unit — entry fees, brokerage, terminal and documentation charges, and inland delivery. Those spread across however many units you bought. Small orders carry the same fixed dollars over fewer units, which is a shipment-size effect rather than anything about the product.
How often should I recalculate landed cost?
Recalculate whenever any input moves: a new supplier price, a new freight contract, a surcharge you have not seen before, a prep rate change, or a change in order quantity. In practice, once per purchase order. The number is only useful if it reflects the shipment you are actually about to buy.
Does the prep center's location change landed cost?
Yes, on two lines. Inbound drayage from your port of entry, and outbound freight to the fulfillment centers Amazon assigns. A location that is cheap on one can be expensive on the other, which is why the choice is a calculation rather than a preference. Sales tax treatment is a third factor and, depending on your volume, occasionally the largest one.
Landed cost is not a spreadsheet exercise. It is the number that decides which deals are real, and it is the one number most sellers carry in their head at somewhere between 55% and 70% of its true value. Work it out once per purchase order, with every line quoted rather than assumed, and most of the surprises in this business stop being surprises.
