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Follow the U.S. distributor’s unit, not two different businesses
Start from the amount the distributor pays its overseas supplier, not the supplier’s manufacturing cost. Then identify shipment, insurance, customs and other costs paid by the distributor. Keep the supplier’s own profit calculation separate.
The U.S. Commercial Service describes landed cost as including the product, freight/insurance, tariffs/taxes and other charges. WEDC’s export-pricing guide likewise identifies costs added between export price and the importer’s landed price. These are cost frameworks, not U.S. tariff quotations.
A US$130 cost increase changes the remainder sharply
Fictional amounts in U.S. dollars per unit: assume the distributor independently models a US$1,500 selling price and US$200 of additional local selling/delivery cost. The shipment and duty amounts are invented assumptions, not rates for any product.
| Cost or remainder | Base assumption | Changed assumption |
|---|---|---|
| Supplier price | 900 | 900 |
| International freight and insurance | 80 | 160 |
| Duty amount | 70 | 120 |
| Other import/broker charges | 20 | 20 |
| Landed amount | 1,070 | 1,200 |
| Selling price less landed amount and US$200 local cost | 230 | 100 |
The remaining US$100 still has jobs to cover
The increase is US$80 in freight/insurance plus US$50 in the assumed duty amount. It reduces the specified remainder from US$230 to US$100. Management, continuing support, finance, tax and any other costs outside the table still need checking; neither remainder is automatically net profit.
Before accepting a fixed customer price, establish which party bears each cost and what its actual contract permits if that cost changes. A shipment term or supplier assurance does not settle customs classification, origin, valuation or importer responsibility.
Use dated quotations and an honest unknown column
Ask management for the actual product description, shipment terms, cost payer, current freight quotation and properly checked duty/fee assumptions. Label each estimate with its date and scope. If a duty input is unresolved, keep it unresolved rather than entering zero.
Test the resulting annual revenue and cost scenario in U.S. unit economics. Keep the per-unit bridge alongside it and check stock purchases and receipts separately in Cash runway. The model shows headroom under assumptions; it does not decide a resale-pricing policy or prove customers will accept a higher price.
Scope
- All figures are fictional. No actual tariff, customs value, origin, trade-agreement benefit, import permission, cost-allocation right or customer demand is determined.
Next step
Prepare a dated per-unit landed-cost bridge, assign every payer and resolve missing inputs before testing supported annual totals in U.S. unit economics.
Sources & review notes
U.S. Department of Commerce — International Trade Administration
Passage, dates and research notes
official-guidance · Landed-cost definition and cost components
Use only the cost-component framework. Foreign tariff examples, de-minimis tips, trade-agreement eligibility and customs classification procedures are not adopted.
Wisconsin Economic Development Corporation
Passage, dates and research notes
official-guidance · Product/distribution costs and export price escalation
Complete three-page PDF read. No market-price, universal margin, tariff, demand or claimed sales-growth outcome is adopted.
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