Every brand that prices a garment from a manufacturing partner needs a landed cost. Not the ex-factory price — the price that arrives at your door, fully loaded, ready to be marked up. Most brands build this in their head and get it wrong by enough to matter.
The components of landed cost
The ex-factory price is only the first line. Everything below it is real money that does not appear on the Proforma Invoice.
- **Ex-factory / FOB price** — what you pay the manufacturer for the goods, packed and ready for pickup.
- **Inland transport to port** — from factory to the port of export. In Pakistan this is usually a few cents per unit for a container.
- **Export and import duties** — Pakistan generally exports garments at low or zero duty; the import duty in your country is the bigger number and depends on the HS code and origin.
- **Ocean freight** — a full container from Karachi to the US East Coast or to Europe is a fixed cost you spread across the units.
- **Insurance** — typically a small percentage of the cargo value.
- **Customs brokerage and clearance** — the fee to get the goods through your customs authority.
- **Delivery to warehouse** — from the port of import to your DC or 3PL.
- **Compliance and certification** — GOTS, GRS, OEKO-TEX, testing — if these are part of your claim, they sit in landed cost.
- **Financing cost** — if you carry the inventory on credit, the cost of that capital is part of the real landed cost.
How to build it
Build the landed cost per unit, not per container. Take the FOB price and add each component as a per-unit figure, even where the source is a fixed container cost. Then do it for the two channels that matter: the price that lands at the DC (DDP to your warehouse in the country of import) and the price that lands at your customer (DDP to a consumer address).
The numbers you actually need
- FOB unit price
- Inland transport per unit
- Import duty per unit (by HS code and origin)
- Ocean freight per unit
- Insurance per unit
- Customs brokerage per unit
- Delivery per unit
- Compliance and certification per unit
- Financing cost per unit (where credit is part of your model)
Add them all. That sum is your real landed cost. Everything else is a guess that will show up later as a margin problem.
The ex-factory price is a starting point, not a landed cost. The landed cost is the number that leaves your margin on the table — or protects it.