Blog Article
How Is Import Cost Calculated? | Landed Cost Guide
Learn how import cost is calculated, including product price, freight, insurance, customs duty, VAT, delivery order, storage, bonded warehouse, customs brokerage and inland transport.
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One of the most common mistakes in importing is making a decision based only on the product price quoted by the supplier. In reality, the true cost consists of the sum of many items such as the product price, freight, insurance, customs duty, VAT, document processes, bonded warehouse, storage and inland transport. In this guide, we explain step by step how import cost is calculated, which items are overlooked, and why cost control before ordering is critical.
What Is Import Cost?
Import cost is not limited to the overseas selling price of a product. It is the total of all expenses incurred from the product's production point until it reaches your warehouse or business premises in Turkey. These expenses include international transport, insurance, customs duties, document processes, bonded warehouse costs and domestic logistics.
Many companies place orders by focusing only on the supplier's price and then face unexpected costs when the product arrives in Turkey. For this reason, conducting a total cost analysis before ordering is the most fundamental step towards calculating profitability accurately and reducing operational risks.
Why Is the Product Price Alone Not Enough?
The price quote received from the supplier (unit price or total amount) reflects only the production or sales price of the product. However, the items added on top of this price can increase the total cost by 30% to 80%. The following situations in particular require attention:
- For products with a low unit price, the freight ratio can be very high
- Product groups subject to high customs duty completely change the cost calculation
- For products under surveillance measures, duty is calculated over a minimum customs value
- Document and inspection requirements (TAREKS, CE) create additional cost and time
For this reason, the ordering decision should be based not only on the product price but on the total landed cost.
Cost Differences by EXW, FOB and CIF Delivery Terms
The delivery term determines up to which point the cost is covered by the supplier and directly affects the total cost calculation:
| Delivery Term | Supplier's Responsibility | Buyer's Responsibility |
|---|---|---|
| EXW | Delivers the product at the factory | Inland transport + export customs + freight + insurance + import customs + inland transport |
| FOB | Loads the product onto the vessel at the port of loading | Freight + insurance + import customs + inland transport |
| CIF | Product price + freight + insurance included | Import customs duties + inland transport + other expenses |
For the same product, there can be a 15-25% difference between the EXW and CIF prices. However, since the CIF price forms the basis on which customs duties are calculated, it also increases the tax burden. The advantages and disadvantages of each delivery term should be evaluated according to the product type and order volume.
How Is the CIF Value Formed?
The CIF (Cost, Insurance and Freight) value consists of the sum of the product price + freight + insurance amounts. In Turkey, the vast majority of import duties are calculated over this CIF value.
CIF = Product Price + Freight + Insurance
The basis for customs duty, additional customs duty and VAT is generally determined by taking the CIF value as a reference. For this reason, calculating the CIF value correctly is critically important in order to know the total tax burden in advance.
If you received a price from your supplier on EXW or FOB terms, you need to calculate your CIF value by adding the freight and insurance amounts separately.
How Do Customs Duty and VAT Affect Costs?
Customs duty is calculated over the CIF value at the rate determined by the product's GTIP (HS code). The main duty items are:
- Customs duty: Ranges between 0% and 20%+ (depending on the GTIP)
- Additional customs duty: Applied additionally to certain product groups
- VAT: Calculated at 20% over the total of (CIF + customs duty + other duties)
- Anti-dumping duty: May be applied to specific countries of origin and products
- Additional financial liability: May be applied to products under surveillance or quota
Duty rates depend entirely on the GTIP code. An incorrect GTIP selection can result in unexpected tax burdens and penalties. For this reason, a GTIP and customs risk assessment must definitely be carried out before ordering. To understand what the GTIP is and its role in importing, you can review our what is GTIP guide.
Delivery Order, Storage, Bonded Warehouse, Brokerage and Inland Transport Expenses
Beyond customs duties, the operational expenses incurred from the port to your warehouse are also included in the total cost:
- Delivery order (ordino): The document release fee paid against the bill of lading (line/agency fee)
- Storage (ardiye): The storage fee calculated according to the time the product waits in the customs area
- Bonded warehouse (antrepo): The warehouse fee for keeping the product until customs procedures are completed
- Customs brokerage: The service fee for preparing and following up the declaration, and for consultancy
- THC (Terminal Handling Charge): Port handling fee
- Inland transport: The cost of transporting the product to your warehouse after it leaves customs
- Bank charges: Commissions for wire transfer, letter of credit or payment against documents
These items can increase rapidly, especially when the waiting time at customs is prolonged. Since storage and bonded warehouse expenses are calculated on a daily basis, completing the customs clearance process quickly is critical for cost control.
Why Is the Cost Calculation Wrong If the GTIP Is Wrong?
The GTIP code is the most fundamental factor affecting import cost. An incorrect GTIP selection leads to the following consequences:
- The customs duty rate is calculated incorrectly
- A surveillance measure is not noticed, resulting in additional cost at customs
- A TAREKS or CE certificate requirement is overlooked
- No risk assessment can be made for products that may be subject to anti-dumping duty
- The total cost calculation does not reflect reality and the profitability analysis is wrong
The GTIP determination process is carried out according to the product's technical specifications, raw material, intended use and function. This process requires expertise and must definitely be completed before ordering.
Sample Import Cost Calculation Logic
Below is a simplified example of an import cost calculation:
| Item | Amount | Description |
|---|---|---|
| Product price FOB | 5,000 USD | Supplier's product price |
| Freight | 800 USD | Overseas transport cost |
| Insurance | 50 USD | Transport insurance |
| CIF value | 5,850 USD | The value that can be taken as the basis in duty calculation |
| Customs duty | Varies by product | Varies by GTIP and country of origin |
| VAT | Varies by product | Should be evaluated according to current legislation |
| Delivery order, storage, bonded warehouse | Variable | Varies by port and operational process |
| Inland transport | Variable | Varies by delivery address |
Note: This calculation is only intended to demonstrate the example logic. Actual duty rates vary according to the product's GTIP code, country of origin, delivery term and current legislation.
In this example, while the product price is 5,000 USD, the landed cost reaches approximately 8,172 USD — in other words, a 63% additional cost arises. In real calculations, duty rates vary by GTIP code and storage periods vary by the speed of customs clearance.
For a detailed, product-specific cost analysis, you can review our import cost analysis service.
Pre-Order Cost Control Checklist
Before placing an order, all of the following items must have been calculated:
- Product price and delivery term clarified
- Freight and insurance amounts obtained
- CIF value calculated
- GTIP code determined
- Customs duty rate checked
- VAT and, if any, additional duties calculated
- Surveillance, TAREKS, CE requirements checked
- Customs brokerage, delivery order, storage estimates made
- Inland transport cost calculated
- Total landed cost table created
- Profitability analysis carried out
Frequently Asked Questions
Does import cost consist only of the product price?
No. Expenses such as freight, insurance, customs duty, VAT, document processes, bonded warehouse, storage, brokerage and inland transport are also included in the total cost. The product price usually accounts for 55-70% of the total cost.
Does the GTIP code affect import cost?
Yes. The GTIP code directly determines the customs duty rate, additional duties, surveillance measures and document requirements. An incorrect GTIP selection can lead to unexpected costs and penalties.
How is cost calculated when importing from China?
The product price, freight, insurance, customs duty, VAT, document expenses and costs within Turkey should be calculated together. Additional surveillance measures or anti-dumping duty may apply to products of Chinese origin.
Should import cost be calculated before placing an order?
Yes. Pre-order cost analysis reduces unexpected expenses and operational risks. It ensures that the profitability calculation is done accurately. You can have a calculation specific to your product prepared by filling in the professional cost analysis request form.
Why is it important to receive import consultancy?
Correct GTIP, duty, document and logistics planning reduces the risk of cost and time loss in the import process. Professional support minimises pre-order risks.
Related Guides
- How to Import from China | Supplier, Sample and Cost Guide
- What Is GTIP? | The Risks of Using an Incorrect GTIP in Importing
Related Services
- Import Cost Calculation
- GTIP and Customs Risk Assessment
- Overseas Supplier Research
- Sample and Product Verification
- How We Work
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