Journal

Furniture Landed Cost and Wholesale Margin: How Retail Buyers Price an Imported Order

The unit price on a proforma invoice is not your cost. Furniture arrives with freight, insurance, duties, port fees and inland transport attached \u2014 and a margin calculated on the wrong base quietly erases profit. This guide walks through the landed-cost formula and how to build a margin that holds.

1. The landed-cost formula

Landed cost per unit = (unit price + share of ocean freight + insurance + import duty + clearance and port fees + inland transport + foreign-exchange loss) \u00f7 units in the order. Every line belongs in the calculation, including the ones the supplier does not show you: destination port charges, container demurrage risk, inspection fees and the cost of samples.

2. A worked example

Example (illustrative figures only): a 40HQ container holds 28 sofa units. Unit price FOB \u20ac580 \u2192 US$630; ocean freight US$3,400 \u00f7 28 = US$121 per unit; insurance US$80 total; duty at 8% on $630 = US$50; clearance, port and inland US$1,200 \u00f7 28 = US$43; FX buffer 2% = US$13. Landed cost per unit \u2248 US$857 \u2014 36% above the FOB price. A buyer pricing from the FOB price alone would under-price by a third.

3. The costs buyers forget

The usual omissions: destination port charges and handling, demurrage and detention if pickup slips, pre-shipment inspection or third-party QC, sample and swatch costs, and currency moves between quote and payment. Each is small alone; together they change the margin. Add a contingency line of 2\u20135% instead of hoping.

4. Setting the wholesale and retail margin

With landed cost fixed, decide the wholesale price by your channel: a retail buyer typically works to a target retail multiple that covers freight on reorders, returns and markdowns. Whatever the multiple, the discipline is the same \u2014 margin is calculated on landed cost, reviewed per order, and re-checked when freight or duty rates move.

5. What to ask the supplier

A supplier that answers four questions fast makes landed cost predictable: exact FOB, CIF and DDP prices; packaging dimensions and volume per unit (for freight calculation); lead time and shipping schedule; and export documentation included. Buyers who request a quote with these specifics get comparable numbers instead of apples-to-oranges invoices.

The bottom line: landed cost is the only honest base for a furniture margin. Price the full chain \u2014 freight, duties, port fees, FX and contingency \u2014 before you commit to a wholesale price, and revisit it whenever shipping or duty conditions change.