Ex-works price comparisons cause more bad sourcing decisions than any other habit. A Chinese quote that looks 9% cheaper often lands 4% more expensive once duty, freight, financing and quality cost are counted — or the other way round. Here is the model we use with clients importing into the US, EU, UK and Australia.
The full landed-cost line items
| Line | Notes |
|---|---|
| Ex-works unit price | Same specification, same packaging, both origins |
| Tooling amortisation | Tool cost divided by realistic 2-year volume |
| Inland to port | Higher in Indonesia and inland Vietnam than coastal China |
| Export documents and customs | Certificate of origin, fumigation, inspection fees |
| Ocean or air freight | Per CBM or per kg, recalculated at your real volume |
| Insurance | Typically 0.1–0.3% of CIF |
| Import duty | Depends on HS code and origin — where FTAs bite |
| Brokerage and destination handling | Fixed per shipment, punishes small orders |
| Finance cost | Deposit paid months before revenue |
| Quality cost | Inspection fees plus expected defect and rework rate |
A worked example
A 20,000-unit annual programme of a metal-and-plastic assembly:
| Line | China | Thailand |
|---|---|---|
| Ex-works per unit | USD 8.40 | USD 9.10 |
| Freight and inland per unit | USD 0.55 | USD 0.62 |
| Duty (destination dependent) | USD 1.68 | USD 0.00–0.45 |
| Inspection and defect allowance | USD 0.22 | USD 0.18 |
| Landed per unit | USD 10.85 | USD 9.90–10.35 |
Change the duty line and the answer flips. That is exactly why the model must be run with your HS code and your destination, not a generic assumption.
The Hong Kong consolidation variable
Where you buy from many small suppliers, a Hong Kong consolidator can cut freight per unit sharply by turning six LCL shipments into one FCL. Model this as a freight saving against the trading margin, and the decision becomes arithmetic rather than emotion.
Hidden costs buyers forget
- Minimum order quantity overshoot. Buying 5,000 when you need 2,000 is an inventory cost, not a discount.
- Payment terms. A 30% deposit four months before sale is real financed cost.
- Rework and returns. A 2% field failure rate can wipe out a 6% unit saving.
- Air freight rescues. One emergency airfreight a year erases most of a small unit-price advantage.
How to run the comparison honestly
- Fix the specification in writing before quoting either origin.
- Ask both origins to quote FOB with the same packaging and carton dimensions.
- Get your broker to confirm duty for each origin against the real HS code.
- Include inspection cost in both columns — no origin is inspection-free.
- Decide on total landed cost per unit delivered to your warehouse.
TUSKO quotes China, Hong Kong-consolidated and ASEAN options on the same sheet, with our fee already inside the landed price. You approve one number.
Frequently Asked Questions
What is landed cost?
The total cost of a product delivered to your warehouse: ex-works price plus freight, duty, insurance, brokerage, handling, financing and quality cost.
Is ASEAN cheaper than China on landed cost?
It depends on your HS code and destination. Duty differences frequently outweigh a 5–10% ex-works gap, but not in every category.
How do I calculate tooling amortisation?
Divide the tooling cost by a realistic two-year volume, not a hopeful five-year one. Most buyers over-forecast.
Should I include quality cost in the comparison?
Yes. Inspection fees plus your expected defect and rework rate belong in the model — they are often the deciding line.
Can TUSKO give me a landed-cost quote?
Yes. Send a drawing or sample with target volume and destination port and we return a landed-cost quotation with the fee already included.
Next step
Send us a drawing, a photo, or a competitor sample with your target landed price and annual volume. We return a landed-cost quotation, a written specification, a realistic lead time, and an inspection plan.
Contact TUSKO on WhatsApp Business @tuskoconsulting or by email at contact@tuskoconsulting.com — WhatsApp within 12 hours, email within 24 hours. One purchase order, one point of contact, one price.