Most Amazon sellers set their COGS equal to what they paid the factory. That number is almost never the real cost of goods. Once you add ocean or air freight, duty and tariff layers, customs brokerage, cargo insurance, drayage, prep, and the inbound leg into FBA, landed cost typically lands 40–70% above the FOB invoice price on goods sourced from China in 2026. A seller who prices against FOB cost is not running a thin margin — they are running a margin they have never actually measured. This article walks through every line item that belongs in landed cost, shows the per-unit math on a real shipment, and explains which of these costs move enough to require re-costing rather than a one-time setup.
What actually belongs in landed cost?
Landed cost is the total cash you spend to get one sellable unit into an Amazon fulfillment center, ready to be picked. Nine line items make it up, and only the first is on your supplier invoice.
- FOB goods cost — the unit price from the factory, at the port of origin.
- International freight — ocean FCL, ocean LCL, air, or express.
- Duties and tariffs — the MFN base rate for your HTS code, plus any Section 301 rate, plus the baseline tariff layer.
- Customs brokerage — a per-entry fee, now unavoidable on virtually every commercial shipment.
- Customs bond — single-entry or continuous, amortized across annual volume.
- Cargo insurance — typically a fraction of a percent of declared value.
- Destination handling and drayage — port charges plus the truck from port to your warehouse or prep center.
- Prep, labeling, and packaging — mandatory since Amazon stopped doing it in-house.
- Inbound to FBA — domestic freight to the fulfillment centers, plus any inbound placement service fee.
What do the 2026 freight and duty numbers look like?
Freight is the line item that moves most, and it moves seasonally. A 40ft container from China to the US West Coast has been quoted broadly in the $3,000–$5,500 range during off-peak stretches of 2026, with East Coast routings running roughly $1,000–$2,000 higher because of longer transit and canal-linked levies. Peak-season pricing is a different world: through the June–July 2026 run-up, market reference rates for a 40ft high-cube pushed into the $6,500–$9,800 band as Black Friday and holiday inventory competed for vessel space. LCL runs roughly $45–$90 per CBM depending on lane.
That spread matters more than the absolute number. If you costed your Q4 inventory using a January freight quote, you undercosted it by a factor that can exceed your entire net margin on a low-priced SKU.
Duty is the other structural change. The $800 de minimis exemption for Chinese-origin shipments ended in May 2025 and has not returned, which means essentially every commercial shipment now requires formal customs entry — complete documentation, a broker, and duty paid regardless of shipment value. Brokerage fees that small importers used to avoid entirely now run roughly $125–$350 per standard entry. On the duty side, most Chinese goods stack an MFN base rate against a Section 301 rate and a baseline tariff layer, and published estimates of the combined effective rate for 2026 range from about 17.5% to well above 35% depending on HTS classification. Your own rate is knowable and specific; industry averages are not a substitute for looking it up.
What does this look like per unit?
Take a 5,000-unit purchase order of a large-standard item. FOB price is $4.20 per unit. One 40ft container, West Coast, off-peak, at $4,500.
| Line item | Shipment total | Per unit |
|---|---|---|
| FOB goods cost | $21,000 | $4.20 |
| Ocean freight (40ft, West Coast) | $4,500 | $0.90 |
| Duty and tariffs (20.9% of customs value) | $4,389 | $0.88 |
| Customs brokerage (one entry) | $175 | $0.04 |
| Cargo insurance (0.5% of value) | $105 | $0.02 |
| Destination handling and drayage | $900 | $0.18 |
| Prep and FNSKU labeling | $1,500 | $0.30 |
| Inbound freight to FBA | $650 | $0.13 |
| Inbound placement fee (minimal split) | $2,000 | $0.40 |
| True landed cost | $35,219 | $7.04 |
The supplier invoice said $4.20. The real number is $7.04 — a 68% understatement. Now run the P&L at a $19.99 price point both ways.
| Line | Using FOB as COGS | Using true landed cost |
|---|---|---|
| Price | $19.99 | $19.99 |
| Referral fee (15%) | −$3.00 | −$3.00 |
| FBA fulfillment fee | −$5.14 | −$5.14 |
| Monthly storage (allocated) | −$0.12 | −$0.12 |
| COGS | −$4.20 | −$7.04 |
| Contribution before ads | $7.53 | $4.69 |
| PPC at 10% of revenue | −$2.00 | −$2.00 |
| Net profit per unit | $5.53 (27.7%) | $2.69 (13.5%) |
Same SKU, same price, same fees. One version looks like a healthy 28% margin business worth scaling aggressively; the other is a 13.5% business where a single fee increase or a peak-season freight spike puts you near break-even. The gap is $2.84 per unit — $14,200 across this one shipment.
Why does the placement fee belong in landed cost rather than in fees?
Inbound placement service fees are charged when you ship to a single destination and Amazon has to redistribute your inventory across the network. Rates changed again in January 2026, with minimal-split shipments running up to roughly $0.40 per unit on standard-size items and materially more on extra-large and bulky tiers. Amazon-optimized splits, where you ship to multiple destinations yourself, carry no placement fee.
Most sellers file this under “Amazon fees” and forget it. Treat it as landed cost instead, because it is a decision you control at the shipment level, not a fee applied to every sale. The trade-off is straightforward arithmetic: compare the extra freight cost of splitting to four or more destinations against the placement fee you avoid, multiplied by shipment volume. On the example above, the choice between minimal split and optimized split is worth $2,000 per container. If splitting adds less than that in freight and handling, splitting wins.
Which of these costs need re-costing, and how often?
Not every line item deserves the same attention. Sorting them by volatility tells you where to spend your time.
| Cost | Volatility | Re-cost when |
|---|---|---|
| Ocean and air freight | High — seasonal swings of 40–80% | Every purchase order |
| Duties and tariffs | High — policy-driven, can change mid-quarter | Every shipment; monitor between |
| Inbound placement fees | Medium — Amazon revises annually | At each fee announcement |
| Prep and labeling | Low — contracted per-unit rates | Annually or on provider change |
| Brokerage, bond, insurance | Low | Annually |
| FOB goods cost | Low — but watch supplier price creep | Each reorder negotiation |
The practical implication is that landed cost is not a field you fill in once when you create a SKU. It is a per-batch number. Two shipments of the same product, six months apart, can have landed costs that differ by more than a dollar a unit — and if you are averaging them into one COGS figure, your profit reporting is telling you about a product that does not exist.
What are the most common landed cost mistakes?
- Using FOB price as COGS. The single most expensive reporting error in Amazon accounting. Everything downstream — margin targets, break-even ACOS, reorder decisions, PPC bid ceilings — inherits the error.
- Averaging landed cost across batches with different freight rates. This blends a cheap January container with an expensive September one and produces a number that describes neither. Batch-level COGS is the fix, and any profit analytics tool worth using supports it — in sellerboard, cost of goods is entered per batch with effective dates, so a shipment that landed at $7.04 does not get retroactively blended into one that landed at $5.90.
- Excluding duty from COGS and booking it as an operating expense. Duty is a per-unit cost that scales with units purchased. Parking it in overhead hides it from SKU-level margin entirely.
- Forgetting that duty is assessed on more than goods value. Depending on your Incoterms and how the entry is filed, freight and insurance can be included in the dutiable value. Confirm with your broker rather than assuming.
- Ignoring the cash-timing difference. Landed cost is paid weeks or months before the revenue arrives. A SKU can be profitable and still starve your cash position if the inbound cycle is long.
- Treating DDP quotes as simpler rather than more expensive. Delivered Duty Paid moves the work to your supplier and the visibility away from you. You lose the ability to see which line item moved when the total goes up.
FAQ
Should freight go into COGS or operating expenses? Inbound freight belongs in COGS. It is a cost of acquiring the specific units you sell, and it varies with those units. Outbound freight — the FBA fulfillment fee — is a selling cost, not COGS.
How do I allocate one container’s freight across multiple SKUs? Allocate by volume (CBM) rather than by unit count or by value. Freight is bought by space, so a bulky low-cost SKU should absorb more freight per unit than a small dense one. Allocating by unit count systematically undercosts your bulky items.
Is air freight ever the profitable choice? Yes, in two situations: when a stockout would trigger the low-inventory fee and cost you rank and velocity, and when the SKU’s margin per unit is high enough that four-to-eight-times-ocean freight cost still leaves an acceptable contribution. Run the number rather than treating air as an emergency-only option — for a $60 product with a $40 contribution, air freight at $3 per unit is cheap insurance.
Does the de minimis change affect me if I ship small quantities by courier? Yes, and it affects those shipments most. The parcel-level model that de minimis subsidized no longer works, because each shipment now needs its own formal entry and its own duty payment. Consolidation into fewer, larger shipments is now cheaper per unit than it used to be.
What is a reasonable landed cost buffer if I cannot get exact numbers yet? Do not use a buffer as a permanent solution, but for initial modeling on Chinese-sourced goods in 2026, adding 45–65% to FOB cost is closer to reality than the 20% many sellers still use. Replace the estimate with actuals as soon as your first entry clears.
Fee schedules, tariff rates, and placement fee structures change on Amazon’s and CBP’s timelines, not yours. Verify current rates in Seller Central and with your customs broker before pricing decisions.
