How to use the Alibaba Profit
- Enter unit price and order quantity.
- Add freight, duty rate and any import VAT.
- Add inspection, sampling and payment processing costs.
- Compare landed unit cost against your intended selling price.
How the calculation works
Landed cost = (unit price × quantity + freight + insurance) × (1 + duty rate), with import VAT applied on that total and recoverable if you are VAT-registered. Duty is assessed on the customs value under the product's HS code, so classifying the product correctly before ordering avoids expensive surprises at the border. Sea freight is far cheaper per unit than air but adds 30–45 days of cash tied up in transit.
Costs buyers routinely forget: third-party inspection at 200–400 per order, sampling and shipping before the main run, tooling or mould charges on custom products, payment fees of 2–3%, and the working capital cost of a 30% deposit paid months before revenue. Minimum order quantities compound the risk — MOQs push you to buy more than you can sell while learning whether the product moves at all. Target at least a 3× multiple from landed cost to retail to survive returns, advertising and platform fees.
Landed = (goods + freight + insurance) × (1 + duty) + VAT + inspection + fees ; margin = (price − landed) / priceSource: Standard customs landed-cost methodology: CIF value, duty by HS code, then import VAT.
Worked example
1,000 units at 4.20, sea freight 1,150, 6.5% duty, 20% VAT (recoverable), 320 inspection, 2.5% payment fees.
- Goods = 4,200; CIF = 4,200 + 1,150 = 5,350.
- Duty = 5,350 × 0.065 = 348.
- Payment fees = 105; inspection = 320.
- Total landed = 6,123, or 6.12 per unit.
6.12 landed per unit against a 4.20 quote — 46% above the price on the listing.
Frequently asked questions
Why is my landed cost so much higher than the quote?+
Freight, duty, inspection and fees typically add 40–70% to the unit price.
Is import VAT recoverable?+
For VAT-registered businesses, generally yes. It is still a cash-flow cost until reclaimed.
Should I ship by air or sea?+
Sea for anything cost-sensitive; air only when speed or low volume justifies several times the freight cost.
Do I need a third-party inspection?+
For a first order from a new supplier, almost always. It costs a few hundred and prevents unsellable stock.
Last reviewed August 31, 2026. We review this page whenever the underlying formula, tax year, published rate or standard changes.