What landed cost per unit means
Landed cost per unit is what one good unit costs you once it has arrived and cleared customs: the quoted unit price plus packaging, freight, import duty and other per-unit charges, plus your share of one-time costs such as tooling and NRE, adjusted for the units you expect to scrap.
It is the number to compare suppliers on. The unit price ignores what happens between the factory and your warehouse, and it hides one-time costs that can be larger than the price difference between two quotes. A supplier that is a dollar cheaper per unit can still be the more expensive choice for your program. See the landed cost glossary entry for the full definition.
The formula this calculator uses
Every supplier is calculated the same way, in this order:
- Freight per unit
freight per unit as quoted, or freight per shipment ÷ units per shipment - Duty per unit
duty % × (unit price + packaging), orduty % × (unit price + packaging + freight per unit)when duty is charged on goods value plus freight - Cost per unit bought
unit price + packaging + freight per unit + duty per unit + other per-unit costs - Units to buy
the larger of the MOQ and program volume ÷ (1 − scrap allowance), rounded up - Total program cost
units to buy × cost per unit bought + tooling + NRE - Landed cost per unit
total program cost ÷ program volume - Cash before shipment
tooling + NRE if paid upfront, plus deposit % × the first order’s value(including any tooling and NRE spread into that order)
A few deliberate choices sit behind these steps:
- Spreading tooling and NRE changes when you pay, not how much. The total always includes the full amount. If it is spread over more units than you will buy, the calculator shows the balance that would remain, because agreements often make it payable.
- Below the MOQ, you pay for the MOQ. The totals assume you buy the minimum and flag it, so a high MOQ shows up in the landed cost instead of hiding in the small print.
- Scrap is your own loss allowance. If the supplier replaces defective units at its cost, leave it at zero.
- Not included: currency conversion, financing and inventory carrying costs, and the cost of a longer lead time. Lead time is shown for reference only.
Worked example (hypothetical numbers)
Two made-up quotes for 10,000 units, with round numbers chosen to show the mechanics. They are not typical prices for any product. Use Fill in the worked example above to load them into the calculator.
| Hypothetical example | Example supplier A | Example supplier B |
|---|---|---|
| Unit price at 10,000 units | USD 18.00 | USD 19.00 |
| Tooling + NRE | USD 60,000 | USD 20,000 |
| Packaging per unit | USD 0.50 | USD 0.50 |
| Freight per unit | USD 1.00 | USD 1.00 |
| Import duty (4% of goods value) | USD 0.74 | USD 0.78 |
| Cost per unit bought | USD 20.24 | USD 21.28 |
| Total program cost | USD 262,400 | USD 232,800 |
| Landed cost per unit | USD 26.24 | USD 23.28 |
| How tooling and NRE are paid | Upfront | Spread over 10,000 units |
| Cash before shipment (30% deposit) | USD 115,500 | USD 64,500 |
Supplier A quotes USD 1.00 less per unit, but carries USD 40,000 more in tooling and NRE. At 10,000 units that one-time cost outweighs the lower price: B lands USD 2.96 cheaper per unit, USD 29,600 over the program. A only catches up above roughly 38,500 units. B also needs less cash before the first shipment because its tooling and NRE are spread into the unit price.
How to read the result
- Rank by landed cost per unit, not unit price. When they disagree, the calculator says so and shows how much choosing on price alone would cost over your volume.
- Read the warnings. Missing freight or duty, a volume below the MOQ, or amortization over more units than you will buy all change the answer.
- Look at cash before shipment separately. The cheapest supplier over the program can still need the most cash upfront, which matters for a startup budget.
- Weigh lead time and risk outside the number. A slower or less proven supplier can cost more than it saves. The factory audit checklist covers what to verify.
Most importantly, the comparison is only as good as the quotes. Make sure every supplier quoted the same brief revision, quantities, scope and Incoterm before you compare. A consistent request makes that much easier: see what to include in an OEM/ODM RFQ and the free RFQ template, whose Excel version includes this calculation for up to five suppliers.
Frequently asked questions
What is the difference between unit price and landed cost?
Unit price is what the supplier charges for one unit under the quoted terms. Landed cost per unit is what one good unit costs you once it has arrived and cleared customs: the unit price plus packaging, freight, import duty and other per-unit costs, plus your share of tooling and NRE, adjusted for units you expect to scrap. Suppliers should be compared on landed cost, because a lower unit price can be outweighed by higher one-time or delivery costs.
Should tooling and NRE be included when comparing quotes?
Yes. Tooling and NRE are real program costs even when they are paid once, and they often differ more between suppliers than the unit price does. Spread them over the volume you actually expect to buy. If a supplier offers to amortize them into the unit price, check how many units that assumes and what happens if you buy fewer; the amount does not disappear, it is paid later.
How do Incoterms affect a quote comparison?
Incoterms decide which costs are already in the price. An EXW price excludes export handling and transport; an FOB price includes delivery onto the vessel at the named port; a DDP price includes freight and import duty to your door. Before comparing, bring every quote to the same point: add the missing freight and duty to the narrower quotes, and enter zero freight and duty for a DDP quote.
Is the information I enter stored or sent anywhere?
It is not sent anywhere. The calculation runs in your browser and nothing you type is sent to Zefinity or anyone else. Your entries are kept only in this browser, so they are still there if you come back; use Clear all to remove them. The CSV export is generated on your device.
Where Zefinity helps
Comparing quotes on the same basis is part of our Connect work: issuing one consistent RFQ package, separating quoted facts from estimates and exclusions, and following up on what a quote leaves out.