You’ve found the perfect product on a supplier directory. The factory price is $10 per unit, and your retail price is $50. It looks like an incredible profit margin. You place your order, wire the money, and wait.

Then, the bills start arriving.

There’s a bill for sea freight. A bill for insurance. A bill from the UK port. A customs clearance invoice. And then a massive, unexpected bill for VAT and Import Duty.

Suddenly, your $10 item has cost you $18 before it even leaves the port, destroying your profit margin.

This is the most common situation new importers face. They mistake the FOB (Free On Board) price for the final price. The FOB price is just the tip of the iceberg; it only covers the cost of the product and getting it to the shipping port in China.

To budget successfully, you must calculate the True To-Door Cost, also known as the “Landed Cost.” This is the only number that matters.

So, what costs are hiding beneath the surface?

Here is the checklist of all the charges that lie between the factory floor and your front door.

The True To-Door Cost Checklist:

1. Product Cost (FOB Price): This is your starting point. It’s the cost of the goods and the transport from the factory to the Chinese port.
2. Freight & Insurance: This is the main shipping cost to get your goods from the port in China to a port in the UK (like Felixstowe or Southampton). This cost can change wildly depending on the time of year and global shipping demand.
3. UK Port Fees (THC): Once the ship docks, the UK port charges Terminal Handling Charges (THC) and other fees to unload your container and move it to the customs area.
4. Customs Clearance Fee: This is the administrative fee a freight forwarder or customs broker charges to file all the necessary paperwork (the C88/SAD form) with HMRC.
5. Import Duty: This is a major cost. It is a percentage of your product’s value (the product cost + shipping). This percentage is set by the UK’s “Tariff” and is different for every single product (based on its commodity code). It can be 0% for some goods and over 20% for others.
6. Import VAT: This is the biggest shock for most new importers. You must pay 20% VAT on the total value of your shipment. That’s (Product Cost + Shipping Cost + Import Duty). While this VAT can be reclaimed later if your business is VAT-registered, it is a massive cash flow cost you must pay upfront.
7. Inland Trucking: The final step. This is the cost of hiring a lorry to pick up your container or pallet from the UK port and drive it to your warehouse, office, or fulfillment centre.

Stop Guessing, Start Budgeting

As you can see, the initial factory price is often less than 60% of the final landed cost.

You can’t build a sustainable business on guesswork. A transparent sourcing partner will never just quote you a factory price. They will provide a complete “Landed Cost” quote that breaks down every single one of these charges before you commit.

Don’t budget based on the factory price. Budget based on the true to-door cost. That is the only key to profitable importing.