How to calculate landed cost from China to Dubai: a worked example
The factory price is only the start. A worked example of everything it costs to get one unit onto your shelf.
- Landed cost is everything it costs to get goods to your warehouse.
- Customs duty in the GCC is often 5% of the CIF value for many goods, but check your product.
- UAE VAT is 5% and generally applies on import.
- Price your product from landed cost, never from the factory price.
A supplier quote of USD 4 per unit can become far more by the time the goods reach a Dubai warehouse. Landed cost adds it all up so you can price correctly.
The components
- Product cost (by Incoterm)
- Freight to the UAE
- Insurance
- Customs duty
- Import VAT
- Clearance and handling fees
- Delivery to your warehouse
A worked example
The figures below are illustrative only, to show the method. Use real quotes and confirm duty rates for your product with a clearing agent.
| Item | Example |
|---|---|
| 1,000 units at USD 4.00 FOB | USD 4,000 |
| Sea freight (LCL) to Jebel Ali | USD 600 |
| Insurance | USD 40 |
| CIF value | USD 4,640 |
| Customs duty at 5% of CIF | USD 232 |
| VAT at 5% of (CIF + duty) | USD 243.60 |
| Clearance, port and handling | USD 250 |
| Delivery to warehouse | USD 100 |
| Total landed cost | USD 5,465.60 |
| Per unit | about USD 5.47 |
In this example, the landed cost is about 37% above the factory price. If you are VAT-registered, import VAT may be recoverable, so check with your accountant how it affects your real cost.
Price from landed cost
Add your margin, marketing, platform fees and any retailer margin on top of the landed cost, not the factory price. Many new importers lose money by pricing from the quote.
Related: Incoterms explained and sea vs air freight.
How Husbar can help
Husbar China Line builds landed cost models and pricing for Gulf brands before the first order is placed. See Husbar China Line.
Frequently asked questions
What is landed cost?
The total cost to get goods to your warehouse: product, freight, insurance, duties, taxes and fees.
What is the customs duty in the UAE?
Many goods are charged 5% of the CIF value under the GCC common tariff, but some products differ. Confirm with a clearing agent.
Is import VAT a cost?
It is paid on import, but VAT-registered businesses may be able to recover it. Ask your accountant.