Payment and costing
Pricing what you import.
Landed cost tells you what the goods cost to have in your warehouse. It does not tell you what to charge, because between the two sit financing, loss, compliance and the cost of running an import operation at all. Businesses that price off landed cost alone are the ones that grow into trouble.
Four costs that never appear on an invoice.
Each is real, each is recurring, and none of them show up in a landed cost calculation built from supplier and freight quotations.
- Financing
- The money is out from the deposit until the goods sell, and on a sea shipment from Indonesia that is measured in months. Whether you borrow or use your own capital, the period has a cost.
- Loss and rework
- Some percentage arrives damaged, short or out of specification. Pricing as though it will be zero makes the first bad shipment look like a disaster rather than a cost of the business.
- Compliance
- Registration, a responsible person, packaging obligations, testing, certification. Mostly annual rather than per shipment, which is why per-container calculations miss them entirely.
- The operation itself
- Somebody's time on specifications, samples, chasing documents and dealing with a supplier eight time zones away. It is a real cost of importing and it scales with the number of suppliers rather than with volume.
Why landed cost per unit moves.
Freight is charged per container and allocated per unit, so a half-empty container carries the same freight over fewer units. That makes landed cost per unit a function of how well you filled the box.
The same applies to fixed costs at each end: clearance, documentation and handling are per shipment. Small frequent orders carry them repeatedly and large infrequent ones spread them.
The consequence is that a landed cost calculated on one shipment is not a constant. Recalculating it per shipment rather than treating the first number as the cost is what keeps pricing honest as volume changes.
Pricing for the channel rather than off the cost.
What a market will pay is a separate question from what the goods cost, and the cost only tells you whether the answer is viable. A product that lands above what the channel supports is a product to stop importing rather than to price optimistically.
Where you sell through distribution, the margin has to survive being divided. A landed cost that works for direct sale can be impossible once a distributor and a retailer both take a share, which is a reason to know the channel before committing to a supplier.
And where the product carries a claim, registered origin, certification, documented provenance, that is where a premium is actually defensible. It is also the part of the proposition that a competitor buying the same goods from the same cluster cannot copy without doing the same work.
Questions buyers ask.
What margin should I take?
Nobody can answer that without knowing your channel, your competition and your costs, and anybody who gives you a number is guessing. What this page can tell you is which costs to include before you decide, because the common error is pricing off a landed cost that was missing four things.
Should I price in dollars or my own currency?
You will almost certainly buy in dollars and sell in your own, which means the exposure sits with you for the whole cycle. Whether to hedge it is a question for whoever handles your finances, and pricing with the exposure visible rather than invisible is the minimum.
How do I know if a product is worth importing at all?
Build the full landed cost including the four hidden ones, compare it to what the channel supports, and check whether the difference survives being divided among everyone who touches it. If it only works at full container volumes you cannot sell, it does not work.
Read next.
Working out a landed cost
Everything between the factory price and the shelf. The twelve lines it contains, and the four that buyers forget.
Currency risk on an import order
Most Indonesian export trade is in dollars, so two currencies move against you. Where the exposure sits and what reduces it.
Trade finance, in plain terms
The gap between paying a producer and being paid by your customer is where importers run out of money.
What sets a minimum order
Setup, material lots, the container and attention. Three of them move and one does not, and knowing which is binding beats any tactic.
Retail or food service
Two channels with different packaging, margins and demands on your supplier.
Sourcing from Indonesia?
Tell us the product, the quantity and the destination. We come back with what it involves before anyone talks about money.