How is DDP shipping priced?

DDP shipping is priced in one of four ways: the carrier bills you for duties and taxes after delivery, you charge shoppers a flat or estimated international fee, a calculator collects landed cost at checkout but you still owe any difference, or a provider calculates landed cost per cart and guarantees it. The model you choose decides when you know your real cost per order and who pays when customs charges more than you collected.

This article explains each model, what is included in a DDP price, and how to compare providers so DDP protects your margin instead of eating it.

What is included in a DDP price?

With DDP (Delivered Duty Paid), the shopper pays nothing at the door, so every cost of getting the parcel into the destination country has to be covered before it ships. A complete DDP price includes:

• Shipping from your origin to the shopper's address.
• Import duty, based on the product's HS code, country of origin and value.
• Import taxes such as VAT or GST in the destination country.
• Customs and brokerage fees, including clearance, entry and disbursement fees.

If any of these is left out of the price, someone pays it later: you, through a carrier invoice, or your shopper, through a bill at delivery.

The four DDP pricing models

1. Carrier DDP billed after delivery

You ship on your own carrier account with duties billed to you. The carrier pays duties and taxes at the border and invoices you weeks later, often with a disbursement or advancement fee on top.

• When you know your cost: after the invoice arrives, long after the sale.
• Margin risk: high. You priced the order without knowing the duty, tax and fees.

2. Flat or estimated DDP fee at checkout

You charge one international fee, or a rough duty estimate by country, and pay the real charges yourself.

• When you know your cost: after the carrier or broker bills you.
• Margin risk: high on high value carts, products with high duty rates and markets with low tax thresholds. You absorb every gap between the estimate and the actual charge.

3. Landed cost calculated at checkout, not guaranteed

A landed cost calculator works out duties, taxes and fees for each cart and collects them with the order total. This is far more accurate than a flat fee, but if customs assesses more than was collected, the difference is billed back to you.

• When you know your cost: at checkout, in most cases.
• Margin risk: medium. Missing HS codes, rate changes and reclassifications still land on your invoice.

4. Guaranteed DDP

The provider calculates the full landed cost for every cart at checkout and guarantees it. If duties, taxes or customs fees come in higher than quoted, the provider absorbs the difference, not you and not your shopper. This is how FlavorCloud prices DDP.

• When you know your cost: at checkout, every time.
• Margin risk: low. The landed cost you collect is the landed cost you pay.

Where does all in pricing fit?

All in pricing is a way to display the DDP price, not a separate pricing model. Instead of showing duties and taxes as checkout lines, you build them into the product price shown in each market. It works best on top of a calculated or guaranteed landed cost, because the price you display is only as accurate as the landed cost behind it. See Localized Market Pricing.

How to compare DDP pricing from different providers

1. Ask who pays the difference. If customs charges more than was collected at checkout, does the provider absorb it or bill it back to you?
2. Check what the quote includes. Confirm brokerage, clearance and disbursement fees are part of the landed cost, not added on a later invoice.
3. Look at when you are billed. Prefer a model where the cost per order is final at checkout.
4. Review the product data it needs. Landed cost depends on HS code, country of origin, weight and value. Ask how missing data is handled.
5. Test your top markets. Run test carts to the countries you sell to most and compare the totals with recent carrier invoices.

To check your current numbers before you switch, follow How to audit your true landed cost before checkout.

FAQs

Is DDP more expensive than DDU?

The duties and taxes owed on the order are the same either way. DDP changes who pays them and when. With DDU, the shopper pays at delivery and often pays a carrier collection fee too, which is when parcels get refused and returned.

What does guaranteed DDP mean?

It means the landed cost quoted at checkout is final. With FlavorCloud, if duties, taxes or customs fees come in higher than quoted, FlavorCloud absorbs the difference.

Can I offer free duties to shoppers?

Yes. You can absorb some or all of the landed cost yourself, but you still need an accurate figure per order so you know what that promotion costs you.

Why do shoppers push back on DDP fees?

Usually because the fees appear late or look higher than expected. Read Why do shoppers push back on DDP fees at checkout?

Want to see guaranteed landed cost on your own carts? Learn more about the Landed Cost Engine or contact your FlavorCloud account manager.