Quick answer
Supplier price answers “what the goods cost.” Landed cost answers “what the goods cost at your chosen destination.”
Two suppliers can reverse positions after freight, insurance, duty, clearance and delivery are added. That is why price comparisons should use the same quantity, currency, specification and destination.
Worked example
A lower unit price that loses after normalization.
Assume 1,000 identical units. Supplier A quotes $8.40 FOB. Supplier B quotes $7.95 but requires higher freight and border-related costs.
- Product cost
- $8,400
- Freight
- $420
- Duty / tax
- $180
- Other
- $65
- Total
- $9,065
- Effective / unit
- $9.07
- Product cost
- $7,950
- Freight
- $690
- Duty / tax
- $205
- Other
- $40
- Total
- $8,885
- Effective / unit
- $8.89
The lower supplier unit price does not tell the full story. In this example Supplier B remains cheaper after normalization, but the gap narrows from $0.45 per unit to $0.18 per unit. In other cases, the ranking can reverse entirely.
The cost stack
What sits between quote price and landed cost?
Supplier purchase cost
Unit price multiplied by order quantity, plus directly attributable setup, tooling or packaging charges.
Origin and international logistics
Pickup, export handling, international freight and insurance depend heavily on Incoterm and shipment method.
Border costs
Duty, import tax where applicable, brokerage and clearance charges can materially affect the unit economics.
Destination costs
Port or terminal charges, inland delivery and other direct costs should be included up to the same destination for every supplier.
Normalize before deciding
Use the same commercial basis.
Match specification, currency, quantity and destination first. Then identify which costs are already included in each quote. Do not add the same freight or insurance twice, and do not assume CIF, FOB or DDP descriptions are interchangeable.
Beyond cost
Landed cost is important, but it is not the entire supplier decision.
Lead time, MOQ, payment terms, specification consistency, quality history and supplier reliability can outweigh a small cost difference. ImportMetric's quote tool deliberately shows numbers rather than producing a buy/reject recommendation.
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