6 November 2019 / 0 min read
If you have previous experience with international orders or have done any research on selling abroad, you’ve no doubt come across the words – “duty and tax”. But how many times have you seen the term: “landed cost”?
Let’s help you decode cross-border as we explain the essential facts about landed cost that no one’s been telling you.
When it comes to international commerce, most people assume you only need to worry about the duty and tax. But these two types of fees just barely scratch the surface of what you’re really dealing with. Landed cost is the sum of the original purchase price for the products plus shipping costs, duty, taxes, and other export or import fees. Below we will break down what these fees actually entail.
When it comes to landed cost, you have to consider the following:
Additional clearance fees also vary by country, carrier, carrier service level, and currency. These include the DDP (Delivery Duty Paid) service fee, brokerage fee, advancement fee, additional line item fee, C.O.D. (Collect on Delivery) collection fee, and other fees from the carrier or customs.
A ridiculous amount of variables are taken into account to accurately calculate a single product’s journey across the border. If you think about the country/region, carrier, currency, and more that we’ve described above, it can feel super overwhelming to manually calculate landed cost. Just check out this landed cost guide (along with an Excel template) from IncoDocs to get an idea of how to do these calculations on your own. No matter how you slice it, doing manual calculations is a lot of work!
There are third-party shipping and fulfillment solutions out there that claim they can work out all the duties and taxes for your international shipments but they fail to take the total landed cost into account. This is because they are not obligated to get it right. Inaccurate rates will cause discrepancies and lose you money in the long run if you work with a business that hides “hidden” fees from you and does not provide accurate rates. If you are allowing customers to prepay duties and taxes, they will also be disappointed when they owe more money when the package arrives at their door, often time leading to package abandonment.
Despite how difficult it is to get a landed cost, it’s still really important to get it right. Estimate too high and lose sales, estimate too low and lose margin or risk upsetting your customers.” The more accurate you can be, the better it is for your international business and the faster it will be for shipments to clear customs.
Ok, so you’re probably convinced now that getting a true and total landed cost is a hopeless endeavor. You’re likely thinking, “I’d rather not waste time trying to figure this out myself.” But did you know that the Zonos Landed Cost product can be used to automate this process? We audit our landed cost calculations on a monthly basis to ensure they’re the most accurate in the industry.
Zonos has multiple landed cost products to easily do these calculations for you and even allow your customers to prepay landed cost at checkout with our plugins and APIs. No surprises = happy customers.
Looking for tax and duty solutions for your global business? Zonos can help. Zonos International Checkout easily integrates with your site and gives you a smarter checkout by calculating a total landed cost (including duty, taxes, plus all the carrier fees) based on the de minimis. It also includes global payments, uses your own shipping carrier, fraud coverage, localized checkout fields, denied party screening, and country restrictions.
Zonos Landed Cost will calculate import duty and tax with carrier fees, de minimis values, and HS code support within your platform or checkout. Zonos has landed cost plugins for ecommerce platforms as well as custom solutions using Zonos APIs.
You can also try our free Zonos Hello to provide de minimis information to your international shoppers while they browse your site.
Zonos Quoter allows you to get instant duty and tax quotes to make your life easier.
Christina Trocco is proud to help build first-class documentation and content at Zonos, the leading landed cost calculation software for cross-border ecommerce. She is a writer at heart with over 10 years of content writing experience in a variety of industries. At Zonos, she whole-heartedly believes in Zonos' company vision in breaking down the complexities of international trade to make cross-border accessible to everyone.