How to Calculate Total Cost When Buying from China

So, you're thinking about sourcing products from China — smart move! With competitive manufacturing costs and a vast range of suppliers, China remains the world’s factory. But here’s the catch: the listed price on Alibaba or made-in-China.com? That’s just the tip of the iceberg. If you’re not careful, hidden fees can sink your profit margins fast.

Luckily, we’ve got your back. In this no-BS guide, we’ll break down exactly how to calculate the total landed cost when buying from China — so you know what you’ll *really* pay before placing that first order.

Step 1: Product Unit Price (FOB)

This is the base cost quoted by the supplier — often listed as "FOB" (Free On Board), meaning the price covers production and delivery to a Chinese port. But FOB doesn’t include shipping, duties, or taxes.

For example:
You find a wireless earbud at $8/unit FOB Shenzhen. Sounds great — until you add everything else.

Step 2: Shipping Costs

Two main options: air freight or sea freight.

• Air Freight: Faster (5–10 days) but expensive — around $4–$8 per kg.
• Sea Freight: Slower (25–40 days) but way cheaper — roughly $1,500–$3,000 per 20ft container.

Let’s say you’re importing 500 units (total weight: 100 kg). Air shipping could cost ~$600. Sea freight for a small LCL (Less than Container Load) shipment? Around $800–$1,200 — including port handling.

Step 3: Import Duties & Taxes

This varies by country. In the U.S., check the HTS code to find your product’s duty rate. For electronics like earbuds, it might be 0%–5%. The EU averages 4%–12%.

You’ll also face VAT or sales tax. The U.S. has no VAT, but the UK charges 20% VAT on imported goods.

Step 4: Additional Fees

Don’t forget these sneaky extras:

• Customs clearance: $100–$200
• Inland freight (port to warehouse): $200–$500
• Supplier middleman fees (if using an agent): 3%–5% of order value

Total Cost Breakdown (Example)

Here’s a real-world calculation for 500 wireless earbuds shipped from Shenzhen to Los Angeles:

That means your true cost per unit jumps from $8 to $10.34. Ouch? Maybe. But now you’re informed — and in control.

Pro Tips to Reduce Costs

• Negotiate bulk discounts with suppliers
• Use sea freight for large orders
• Check if your country has a free trade agreement with China
• Hire a reliable freight forwarder — they save time and money

Bottom line: Always calculate total landed cost before saying “yes” to a supplier. Because the cheapest quote isn’t always the best deal.