Our friends at ChinaImportal just developed a nice calculator to estimate the total landed cost of a product made in China and shipped to the EU, the USA, or Australia. Get access to it here.
Import Cost & Profit Calculator
It will be a helpful start for those companies just starting to buy from China. Especially those e-commerce sellers who can be tempted to see a product they like on a trade show or Alibaba, place an order and skip several essential steps of the buying process.
How to use the calculator
It is quite simple:
- You enter the unit cost and the cost of non-recurring engineering.
- Based on the import duty rate (coming from you) and the destination country/area (which impacts the calculation), it comes up with the amount of duties.
- You input an estimate of quality control costs and freight expenses.
- Based on your selling price and volume, it shows what margin you can still count on — that’s what you will need for marketing & distribution, for ordering a larger batch, for designing version II of your product, etc.
- Read the FAQ at the bottom to see what other charges will apply.
For a company buying from China for the first time, this is easy to use and will point them in the right direction. You will know what major costs to factor in, and you can research them appropriately.
Obviously, this is a simple tool that comes with its own limitations:
- It doesn’t include the cost of design & development, legal work, etc.
- It doesn’t factor in marketing expenses. As the page mentions:
“Regardless of whether you sell on Amazon or your own store, you will need to budget for marketing expenses, such as Facebook PPC and Youtube video ads. This cost is significant and can exceed all other expenses combined.”
- It doesn’t include distribution costs — for example, the hefty fees Amazon charges its third-party sellers.
In other words, it doesn’t model the full P&L of the product. Maybe that’s coming down the pipes soon?
Watch this video and learn how to improve management of quality from Chinese & Asian suppliers
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