The factory quote is the start of the story, not the end. Here's how to work out what a product really costs once it's landed on Australian soil.
Ask most people what a product costs and they'll quote the ex-factory price — the number the factory puts on the quote sheet. That number is the beginning of the story, not the end of it. To know whether something is actually worth importing, you need to calculate the landed cost of importing to Australia: every cost it takes to get one unit from the factory floor to your warehouse, ready to sell. Get that number wrong and a product that looked profitable on the quote can lose money the moment it clears customs. Getting it right is the difference between a margin you can trust and a nasty surprise. It sits right at the core of how we find and fix already-selling products — because a good product with the wrong landed cost is still a bad deal.
What landed cost actually means
Landed cost is the true, all-in cost of one unit delivered to your door in Australia — not just what you paid the factory. It rolls the ex-factory price together with freight, insurance, import duty, GST, customs charges, inspection, packaging and the cost of getting the goods from the port to you. Think of it as the price tag with nothing hidden. The reason it matters is simple: your margin is calculated from landed cost, not from the factory quote. If you price a product off the ex-factory number, you're pricing off a fiction — and the difference doesn't show up until the money's already spent.
The cost stack: what goes into a landed cost
It helps to build the number up in layers. Start with the ex-factory (or FOB) price — the cost of the goods themselves, loaded and ready to ship. On top of that sits international freight and insurance, which can be modest for something small and dense, or brutal for anything light and bulky. Then come the border costs: import duty, GST, and a customs processing charge on larger consignments. After the goods land, you've still got local costs — unpacking, quality inspection, retail packaging if the factory doesn't do it, and delivery from the port or warehouse to wherever you actually sell from. Add every one of those together, divide by the number of units in the order, and you finally have a real per-unit landed cost you can price against.
How to calculate landed cost when importing to Australia, step by step
Here's the order the numbers actually stack in. First, the customs value — for most imports this is based on the transaction price of the goods, usually the FOB value. Import duty is charged on that customs value; the general rate is commonly around 5%, but it depends entirely on the product's tariff classification and its country of origin, and a free trade agreement can bring it down to zero. Next, GST. Australian GST is 10%, but it isn't charged on the goods alone — it's charged on the "value of the taxable importation", which is the customs value plus international transport and insurance plus the duty. So GST sits on top of duty, not beside it. One more rule matters: consignments valued at A$1,000 or less generally clear without duty or GST at the border, while anything over A$1,000 clears formally and attracts duty, GST and an import processing charge. A commercial order is almost always over that threshold, so plan for the full stack. If you're GST-registered, the 10% is usually claimable back as a credit — so treat it as a cash-flow cost rather than a final one, but never pretend it isn't there.
As a rough shape: take a unit at, say, a $10 ex-factory price, add its share of freight and insurance, add duty on the goods, then add 10% GST across the lot, then add its slice of inspection, packaging and local delivery. A $10 unit routinely lands closer to $14–16 once everything's counted — and that landed number, not the $10, is what your selling price has to work from.
The costs that quietly kill the margin
The border taxes are the obvious part. The costs that catch people out are the quiet ones. Volumetric weight is the big one: freight is charged on whichever is greater — actual weight or the space the box takes up — so a light, bulky product can cost far more to ship than its weight suggests. We treat that as a product decision, not a delivery detail, and it's worth reading why freight is a product decision, not a delivery cost. Then there's a realistic allowance for returns and warranty, inspection and QC so you aren't paying to import defects, retail packaging, and payment or platform fees if you're selling direct. None of these is dramatic on its own. Added together, they're often the whole gap between a product that clears a healthy margin and one that clears nothing.
Why you work it out before you commit
The point of a landed cost isn't paperwork — it's a go/no-go number. Work it out early, on a spreadsheet, before you order anything, and you can kill a bad product for the cost of an afternoon instead of the cost of a container. A landed cost that leaves no room for a healthy margin is one of the clearest signals to walk away, and it's one of the first checks we run when we validate a product before manufacturing it. Do the sums honestly, label every figure as quoted or estimated, and build in the costs you'd rather ignore. The products worth importing are the ones that still look good after you've been deliberately pessimistic about the numbers.
Frequently asked questions
How do you calculate landed cost?
Add every cost of getting one unit from the factory to your door, then divide by the number of units. That means the ex-factory price plus international freight and insurance, import duty, GST, any customs processing charge, inspection, packaging and local delivery. The result is your true per-unit cost — the number your selling price and margin should be built on, not the factory quote.
What is included in landed cost?
The goods themselves (ex-factory or FOB price), international freight and insurance, import duty, GST, customs charges on larger consignments, quality inspection, retail packaging, delivery from the port to you, and a sensible allowance for returns and warranty. If a cost stands between the factory and a sellable unit on your shelf, it belongs in landed cost.
Do you pay GST and duty on imports under $1,000 in Australia?
Generally, consignments valued at A$1,000 or less clear without duty or GST charged at the border, though overseas sellers may charge GST at the point of sale. Consignments over A$1,000 clear formally and attract import duty, 10% GST on the value of the taxable importation, and an import processing charge. Most commercial orders sit above the threshold, so budget for the full amount.