For many Amazon FBA sellers, profitability problems don’t start with low sales or high PPC costs — they start much earlier, at the landed cost calculation stage. Sellers often assume that if a product is selling well, profit will follow automatically. Unfortunately, that is not how Amazon works.

If your landed cost is inaccurate, every decision you make afterward — pricing, PPC bids, break-even ACOS, reordering, and scaling — will be based on incorrect numbers. This is why understanding and calculating landed cost accurately is one of the most critical skills for any serious Amazon FBA seller.

This guide explains landed cost in depth, breaks down every component involved, and shows you exactly how to calculate it correctly so you can protect your margins and scale with confidence.

What Landed Cost Really Means in Amazon FBA

In simple terms, landed cost is the total cost of getting one unit of product from your supplier to Amazon’s fulfillment center, fully ready to be sold. It is not just the factory price, and it is not just shipping.

Landed cost includes every expense you pay before a product is available for sale on Amazon. If money leaves your pocket prior to the first sale, it must be included in landed cost.

Many sellers confuse landed cost with total cost or Amazon fees, but these are different. Landed cost stops once the inventory has arrived at Amazon. Fees like FBA fulfillment, referral fees, and PPC costs come after the product sells and should never be mixed into landed cost calculations.

Why Accurate Landed Cost Calculation Is Critical

Inaccurate landed cost calculations are one of the main reasons Amazon sellers struggle even with decent revenue. If your landed cost is understated, you may believe a product is profitable when it is not. This leads to underpricing, overspending on ads, and eventually cash flow problems.

Accurate landed cost allows you to set prices confidently, understand your true profit per unit, calculate break-even ACOS correctly, and decide whether a product can scale. Without it, you are operating your business on assumptions instead of data.

Simply put, you cannot build a sustainable Amazon business without knowing your real landed cost.

The Foundation: Product (Factory) Cost

The first part of landed cost is the product cost charged by your supplier. This is usually quoted as a per-unit price and may include basic packaging, inner boxes, or standard labels, depending on your agreement.

This cost should always be calculated based on the actual invoice amount paid, not a rough estimate or Alibaba listing price. Many suppliers adjust pricing once quantities, packaging, or materials are finalized, so relying on an early quote can distort your calculations.

For example, if your supplier charges $3.50 per unit and you order 1,000 units, your total product cost is $3,500. This number becomes the base of all further calculations.

International Shipping: One of the Biggest Variables

International shipping is often the most underestimated part of landed cost. The actual cost depends on the shipping method you choose — air express, air freight, or sea freight — as well as the shipment’s weight, volume, fuel surcharges, and destination port.

Sea freight is typically the cheapest option per unit but has longer transit times. Air freight is faster but significantly increases landed cost, especially for heavier or bulky products.

To calculate shipping cost per unit accurately, always divide the total shipping invoice by the total number of units shipped. Never guess or use old shipping averages, as rates fluctuate frequently.

For example, if sea freight for a shipment costs $1,200 and contains 1,000 units, the shipping cost per unit is $1.20. This amount must be added directly to the landed cost of each unit.

Customs Duties, Taxes, and Import Charges

Customs duties and import taxes are another area where sellers often make mistakes. These costs are determined by the product’s HS code, declared value, and the destination country’s import regulations.

In the United States, many products are subject to customs duties, even if the percentage seems small. That percentage still adds up when applied to large shipments. Some countries also charge VAT or GST, which may or may not be recoverable depending on your business structure.

For example, if your shipment has a declared value of $3,500 and the applicable duty rate is 6%, you will pay $210 in customs duty. Spread across 1,000 units, that adds $0.21 per unit to your landed cost.

Ignoring customs duties is one of the fastest ways to underestimate landed cost and overestimate profit.

Freight Forwarder and Destination Charges

Beyond the headline shipping cost, freight forwarders often charge additional destination fees. These include port handling, documentation, terminal fees, customs clearance, and local delivery to Amazon or a prep center.

These fees are usually bundled together in an invoice and overlooked by sellers who focus only on international freight charges. However, they are real costs and must be included.

If your destination charges total $350 for a shipment of 1,000 units, that adds another $0.35 per unit to your landed cost. Missing this step alone can wipe out a large portion of your margin.

Amazon Inbound Shipping Costs

Once your inventory reaches the destination country, you still need to move it into Amazon’s fulfillment network. This is done through Amazon’s partnered carriers or third-party logistics providers.

Amazon inbound shipping costs vary based on shipment size, number of fulfillment centers, and distance. Many sellers forget to include this cost when calculating landed cost, assuming it is small. In reality, it can be significant, especially with split shipments.

For example, if Amazon inbound shipping costs $300 for 1,000 units, this adds $0.30 per unit to your landed cost.

Prep, Labeling, and Inspection Costs

Depending on your setup, you may also pay for product inspections, labeling, polybagging, or bundling services. These costs are common when using third-party prep centers or quality control agencies.

Even though these services are optional, they are still part of landed cost because the product cannot be sold without them being completed.

If inspection and labeling together cost $250 for a shipment of 1,000 units, that adds $0.25 per unit to the landed cost.

Putting It All Together: Calculating Final Landed Cost

Once all components are calculated on a per-unit basis, you simply add them together.

Using the examples above, a single unit’s landed cost would include the factory cost, international shipping, customs duty, destination charges, Amazon inbound shipping, and prep costs. When combined, these smaller numbers reveal the true cost of having one sellable unit inside Amazon’s warehouse.

This final per-unit landed cost is the number you must rely on when making pricing decisions, planning PPC campaigns, or evaluating profitability.

Landed Cost vs Amazon Fees: A Critical Distinction

It is important to emphasize that landed cost does not include Amazon referral fees, FBA fulfillment fees, storage fees, or advertising costs. Those expenses occur only after the product sells.

Mixing Amazon fees into landed cost leads to confusion and incorrect profit calculations. Landed cost is strictly pre-sale; Amazon fees are post-sale.

How Accurate Landed Cost Impacts PPC and Scaling

Once you know your true landed cost, you can calculate your real profit margin and determine your break-even ACOS. This tells you how aggressively you can advertise without losing money.

Without accurate landed cost, PPC optimization becomes guesswork. With it, PPC becomes a strategic tool that you can scale confidently.

Final Thoughts

Accurately calculating landed cost is not just an accounting exercise it is the foundation of your entire Amazon FBA business. Every profitable seller treats landed cost as a non-negotiable metric and recalculates it for every shipment.