Your Results
Total Landed Cost per Unit
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The sum of ex-works price, freight, duties, and other fees per unit.
Payment Term Adjustment per Unit
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The financial impact of payment terms on the unit cost, reflecting the time value of money.
Adjusted Landed Cost per Unit
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The total landed cost per unit, further adjusted to account for the financial impact of payment terms.
How This Calculator Works
The tool calculates the total landed cost per unit by adding the ex-works price, freight charges, customs duties, and any applicable tariffs. It also adjusts for payment terms, converting them to a standardized cash basis to allow for direct comparison across different supplier offers.
When to Use This Tool
A CPG brand is sourcing a new specialty ingredient for an upcoming product launch and has received quotes from three international suppliers.
The tool reveals that Supplier B, despite having a slightly higher ex-works price, offers the lowest adjusted landed cost due to more favorable freight rates and longer payment terms, making it the most cost-effective choice.
An existing CPG product needs new packaging materials, and the operations team is comparing a domestic supplier with an overseas option.
The tool highlights that the overseas supplier's lower unit price is offset by significant customs duties and higher freight costs, making the domestic supplier the better financial option once all factors are considered.
Common Questions
Why do I need to include payment terms in the comparison?
Payment terms impact your working capital. Longer payment terms can offer a cash flow advantage, while shorter terms might incur an implicit cost if you need to finance inventory sooner. This tool quantifies that difference to provide a true cost.
What if I don't know the exact freight cost per unit?
You can estimate it by dividing the total freight quote by the number of units in the shipment. For more accuracy, request a DDP (Delivered Duty Paid) quote from your supplier or a separate freight forwarder quote for your specific volume.
Does this tool account for quality differences between suppliers?
No, this tool focuses purely on financial cost comparison. Quality, reliability, lead times, and other non-financial factors should be assessed separately as part of your overall supplier selection process.
Stop Overpaying. Get Your True Supplier Costs.
Guidance provides CPG brands with expert-built tools and insights to optimize sourcing decisions, reduce costs, and improve operational efficiency.
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