Your true landed cost is everything it takes to get an international order to your customer: the product, shipping, duties, import taxes, customs fees, carrier surcharges, currency and payment costs, and the cost of returns. To audit it, take a sample of recent orders for each market, list every cost line you actually paid, and compare the total with what you collected at checkout. Any gap is margin you are losing or a surprise your customer is paying at the door.
What goes into landed cost
Cost | Where to find it | Common mistake |
Shipping | Carrier invoice | Using the quoted rate instead of the billed rate |
Duties | Customs entry or carrier duty lines | Wrong HS code or country of origin |
Import taxes (VAT, GST) | Carrier invoice or tax filing | Forgetting that many markets tax shipping as well as goods |
Customs and brokerage fees | Carrier invoice | Leaving them out because they are small per order |
Carrier surcharges | Carrier invoice (fuel, remote area, peak, corrections) | Ignoring peak and fuel changes during the year |
Currency and payment costs | Payment processor reports | Pricing in USD and converting at checkout without a buffer |
Returns | Return labels and refunds | Assuming duties and taxes come back automatically |
How to run the audit
1. Pick your sample
Pull 20 to 50 recent orders for each of your top markets, with a mix of order values and product types. Use exports from the FlavorCloud Admin to get order level data.
2. Check the product data on each order
Duties depend on the HS code, the country of origin and the declared value. Confirm each is correct before you look at the money, because a wrong code changes every number after it.
- Managing your customs description
- Managing your country of origin
- Declared value and customs valuation
3. List every cost you actually paid
Use billed amounts, not quotes. Add each line from the table above to the order.
4. Compare with what you collected
For each order, compare what the shopper paid for shipping, duties and taxes at checkout with what you paid. For DDU orders, also note what the shopper was asked to pay on delivery and whether the parcel was refused.
5. Check thresholds by market
Low value exemptions and tax registration thresholds differ by market and change often. Several markets have reduced or removed them, so orders that used to arrive duty free may not anymore. See Managing tax thresholds.
6. Add currency, payment and return costs
Add currency conversion and payment fees, then the cost of returns for that market: return shipping, refunds and any duties and taxes you cannot recover. Some can be. See Understanding duty avoidance and duty recovery.
7. Decide what to show, include or absorb
With the true number in hand, choose for each market whether to show duties and taxes as separate lines, build them into an all in price, or absorb part of them to hit a price point.
Fix the gaps at checkout
- Collect the real number. The Landed Cost Engine calculates guaranteed duties, taxes and customs fees for every order at checkout, so what you collect is what covers the shipment.
- Ship DDP. See Shipping with DDP.
- Price by market. Use Localized Market Pricing to show all in prices in each market.
- Quote before you commit. Use the Rate Quote Tool to check shipping and landed cost for a new market.
FAQs
How often should I audit landed cost?
At least once a quarter, and whenever a market changes its duty or tax rules, a carrier changes surcharges, or you add new products.
What is the difference between landed cost and shipping cost?
Shipping cost is what the carrier charges to move the parcel. Landed cost adds duties, import taxes, customs fees and every other cost of getting the order delivered.
Why do my collected duties not match what was billed?
The most common causes are a wrong HS code, a wrong country of origin, a declared value that differs from the price charged, or an estimate that did not include customs fees. Fix the product data first, then switch to a guaranteed landed cost at checkout.
Want help auditing a market? Contact your FlavorCloud account manager.
