Rising Shipping Costs: How to Price Using Landed Cost

The short answer

• Landed cost is the total cost of getting a product to your customer: goods, freight, insurance, duties, broker and bond fees, storage and last-mile delivery.
• Duties depend on the classification of the product in the Harmonized Tariff Schedule, its origin and its declared value.
• Tariff rules and duty treatment of low-value shipments change often. Check CBP and ask your customs broker before you set prices.
• Pricing on the product cost alone is the most common cause of thin margins in cross-border e-commerce.
• Consolidating shipments, improving packaging and choosing the right transport mode are the levers you control.

Table of contents

1. What landed cost includes
2. How to calculate it
3. What drives duties
4. The levers you control
5. Shipping promises to customers
6. Keep the numbers in your books
7. Frequently asked questions

Founders who sell physical products across borders often set prices from the cost of the product plus a margin. Then shipping, duties and fees arrive, and the margin is gone. The answer is not a price increase by guesswork. It is knowing the landed cost of every product.

What landed cost includes

Landed cost is the full cost of getting one unit to the customer’s door:

Component	Examples
Product	Purchase or production cost
International freight	Ocean, air or courier, and insurance
Duties and fees	Import duty based on classification, origin and value
Customs handling	Broker fee, bond, filing fees
Storage and handling	Warehouse receiving, storage, picking, packing
Last-mile delivery	Domestic carrier cost
Returns	Return shipping, inspection, write-offs
Payment and platform fees	Processor and marketplace commissions

Add the yearly overhead of the company on top: see the hidden costs of a U.S. LLC.

How to calculate it

1. List every component for one product, at the real quote of each provider.
2. Divide shared costs, such as a container or a bond, by the number of units.
3. Add returns as a percentage of sales, based on your history.
4. Divide the result by (1 minus your target margin) to get the minimum price.

Example with invented numbers, for illustration only: a product with a total landed cost of $20 and a target margin of 40% needs a minimum price of $20 / (1 - 0.40) = $33.33, before marketplace or payment fees.

What drives duties

Duties do not depend on who imports, or where the goods are stored. They depend on:

• Classification in the Harmonized Tariff Schedule of the United States. CBP notes that specialists train for months to classify goods correctly: ask your broker to confirm it.
• Origin of the goods.
• Declared value.

Tariffs and the treatment of low-value shipments change often. Check CBP and ask your customs broker before you set prices, and re-check them when you plan a new shipment.

The levers you control

• Consolidate shipments. Fewer, larger shipments usually cost less per unit than many small ones.
• Choose the transport mode by total cost and time. Air is not always the better choice for urgent stock, and ocean is not always cheaper once storage and delays are counted. [Probabile]
• Improve packaging. Lighter and smaller packages reduce freight, and can reduce duty when duty is based on weight or volume.
• Use a freight forwarder or a 3PL that quotes the full route. Compare at least two.
• Review suppliers. Check the terms of sale, for example who pays freight, and the hidden fees in each quote.
• Consider a U.S. warehouse if the volume justifies it: see what to check first.

Shipping promises to customers

Free or fast shipping is a marketing choice, not an obligation. Promise what your landed cost supports. A promise you cannot afford hurts more than a clear shipping fee. State delivery times and return conditions on the product page.

Keep the numbers in your books

Track freight, duties, storage and returns in separate accounts, so you see the real margin per product. Our bookkeeping at $279 per month, price as of September 2026, does this each month. See also customs clearance for the documents behind duties.

Frequently asked questions

What is landed cost?

The total cost of getting a product to the customer: goods, freight, insurance, duties, customs fees, storage and last-mile delivery.

How do I set prices when shipping costs rise?

Recalculate the landed cost with current quotes, divide by one minus your target margin, and compare with what customers accept.

Who decides the duty on my product?

Duties depend on classification, origin and value. A customs broker can confirm the classification.

Does a U.S. LLC lower shipping costs?

Not by itself. The savings come from routes, volumes, packaging and providers.

Should I raise prices or absorb the cost?

Neither by default. Compare the landed cost with your margin and with competitors, then decide.

Sources

1. CBP, Internet purchases and informal entries
2. CBP, Bonds
3. USITC, Harmonized Tariff Schedule

First published December 11, 2025. This article is general information, not tax advice for your situation. Bookkeeping and accounting | Book a free call