What does your product cost by the time it actually lands?

Your FOB price is fiction until freight and tariffs are on it. Landed cost = FOB + freight + FOB x (duty % + other %), and tariffs turned that line from a spreadsheet afterthought into the one that decides whether scale is worth it. Answer a few questions and get your landed unit cost, your true gross margin, and the price move that restores what the duty took.

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By Taylor Sicard · co-founded WIN Brands Group and scaled it to mid nine figures · landed cost is the line I re-underwrote on every product across the brands I've operated and advised

HOW LANDED COST AND TRUE GROSS MARGIN ARE CALCULATED

Landed cost is what a unit really costs by the time it reaches your warehouse: factory price, plus freight, plus duty and fees charged on the factory price. Duty is levied on the FOB value, not on retail, so every dollar you pay the factory costs you twice. Divide the gap between retail price and landed cost by the retail price and you have your true gross margin, which is the only version worth planning against.

Formula: landed unit cost = FOB + freight per unit + FOB x (duty % + brokerage, insurance and compliance %).
True gross margin = (retail price minus landed cost) divided by retail price. The FOB-only version most spreadsheets still run leaves the duty line out and reads higher.
Restore price = landed cost divided by (1 minus your FOB-only margin), which is what you would have to charge to get back to the pre-duty margin.
Inputs: retail price per unit, FOB unit cost, freight per unit, duty or tariff rate as % of FOB, other fees as % of FOB (3% is a reasonable default).
Healthy band: 55% and up landed gross margin leaves room for marketing, fulfilment, and profit. 40 to 55% is workable at strong AOV. Under 40% the paid-acquisition model stops working, so reprice or re-source.
Common mistake: applying the duty rate to the retail price. It is charged on what you paid the factory, and the margin math only comes out right if you calculate it there.

Worked example. Retail $60, FOB $14, freight $2.40, duty 25%, other fees 3%. Duty and fees are 14 x 0.28 = $3.92, so landed cost is 14 + 2.40 + 3.92 = $20.32. True gross margin is (60 - 20.32) / 60 = 66.1%, against an FOB-only reading of (60 - 16.40) / 60 = 72.7%. The duty line costs 6.5 points of margin, and restoring 72.7% would mean retailing at 20.32 / 0.2733 = $74.34, a 23.9% increase.

Source: Taylor Sicard, Taylor Sicard Consulting · Updated August 2026

The method behind the number

What tariffs do to the unit economics.

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Tariffs and your unit economics

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Tariff-proofing your brand

Sourcing, classification, and pricing moves that blunt the duty line before it lands.

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Contribution margin for DTC

Landed cost is the first line of the per-order P&L. Here's the rest of it.

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Method

How the number is calculated

Landed unit cost = FOB + freight per unit + FOB x (duty % + other %). Duty is charged on the FOB value, not your retail price. True landed gross margin is (price minus landed cost) divided by price, and the tool shows the erosion versus FOB-only math, the flattering version most spreadsheets still run. It also computes the retail price that would restore your pre-duty margin: landed cost divided by (1 minus your FOB-only margin). The bands use the public DTC median gross margin, which sits in the low-to-mid 50s.

Landed gross margin 55%+Room for marketing, fulfilment, and profit to coexist.

40 to 55%Workable at strong AOV, but every duty increase comes straight out of EBITDA.

Under 40%The P&L math stops working for a paid-acquisition DTC brand. Reprice or re-source.

Landed cost is where the rest of the margin math starts: the profitability calculator carries it through to EBITDA, and the DTC inventory cash-flow calculator shows what the same units do to your cash cycle. All of the free DTC calculators share these benchmarks.

Questions

Common questions

What is landed cost?

The full cost of getting one unit from the factory floor to your warehouse shelf: the FOB (ex-factory) price, freight per unit, duties and tariffs charged on the FOB value, and the smaller lines like brokerage, insurance, and compliance. Any margin math that starts from FOB alone overstates what you keep.

What is the landed cost formula?

Landed unit cost = FOB + freight per unit + FOB x (duty % + other %). Worked example: a $14 FOB unit with $2.40 freight and a 25% duty plus 3% brokerage lands at $14 + $2.40 + $3.92 = $20.32. On a $60 retail price that is a 66% landed gross margin, versus 73% on FOB-only math.

How do tariffs change DTC margin math?

They moved landed cost from a spreadsheet afterthought to the line that decides whether scale is even worth it. Tariffs and the end of de minimis pushed duty from a rounding error to a top-three cost line for import-heavy brands. Every point of duty on FOB comes straight out of gross margin, and gross margin is what pays for marketing, fulfilment, and profit.

What gross margin does a DTC brand need?

Public DTC median gross margin sits in the low-to-mid 50s. At 55%+ there is room for marketing, fulfilment, and profit to coexist. Between 40 and 55% the model works at strong AOV, but every duty increase comes straight out of EBITDA. Under 40%, the paid-acquisition math stops working: reprice or re-source.

Should I raise prices to offset tariffs?

Sometimes, and this calculator shows the exact number: the retail price that restores your pre-duty margin is landed cost divided by (1 minus your FOB-only margin). Whether conversion survives that price is a separate question, and the conversion vs margin tipping-point calculator tests it. Often the answer is a partial raise plus re-sourcing, not one lever.

What is the difference between FOB and DDP?

FOB (free on board) means you take ownership at the origin port: freight, duty, and clearance are your problem and your cost lines. DDP (delivered duty paid) means the supplier quotes one price with freight and duties baked in. DDP feels simpler but hides the duty line you most need to see. This calculator assumes FOB terms so every component stays visible.