Guides › How to work out landed cost from Alibaba to the UK

How to work out landed cost from Alibaba to the UK

The supplier price is often only half of what a product really costs you. Here's how to add freight, duty, VAT and UK charges, with a worked example.

By the DealDetective team · 13 October 2026 · 5 min read

Your landed cost is what each unit costs once it's sitting in the UK, ready to sell: the supplier price plus payment fees, freight, import duty, UK port and customs charges, and import VAT if you can't reclaim it. On a typical small Alibaba order, the supplier price is often only about half of that total.

This guide walks through each cost in the order you pay it, then puts them together in one worked example.

The worked example

We'll use one product all the way through: 500 silicone dog lick mats from an Alibaba supplier at $1.20 each, shipped by sea, priced FOB (the supplier gets them to the Chinese port, you pay from there).

So the $1.20 mat really costs £1.73, or £2.01 if you're not VAT registered. The supplier price is 52% of the real cost, or 45% for a seller who isn't registered.

The freight quote, UK charges and duty rate above are example figures. Yours depend on the product, the size of the shipment and the forwarder, so get real quotes before you order.

1. Convert the supplier price to pounds

Alibaba suppliers usually quote in US dollars. Convert at the rate you'll actually pay, not the headline rate you see on Google. Banks and card providers add a margin, and paying through Alibaba adds a transaction fee.

In the example, $600 at £0.75 to the dollar is £450, and we've allowed 3% for payment and currency fees. If you pay by bank transfer through a cheaper provider, this can be lower.

2. Check what the price includes (the Incoterm)

The Incoterm on the quote decides which costs are already in the price:

• EXW (Ex Works): you pay for everything from the factory door, including getting the goods to the port and through Chinese export customs.
• FOB (Free On Board): the supplier delivers to the port and loads the ship. You pay the freight and everything after. This is the most common for small orders.
• DDP (Delivered Duty Paid): the supplier delivers to your door with duty and import VAT paid. Simpler, but check the price carefully, as those costs are built into it.

Comparing an EXW quote with a DDP quote without adjusting for this is one of the most common costing mistakes.

3. Freight to the UK

For small orders, you'll usually choose between:

• Sea freight (shared container): cheapest per kilo, but slow, often five to seven weeks door to door.
• Air freight or express courier: much faster, often one to two weeks, but priced on weight or size, whichever is bigger.

Ask a freight forwarder for a quote with the carton count, carton size and total weight from the supplier. In the example, the forwarder quoted £220 to get the order to the UK.

4. Import duty

Duty is a percentage of the customs value, which in the UK is the price of the goods plus the cost of shipping them to the UK. Look up your product's rate in the government's Trade Tariff tool using its commodity code. Rates vary a lot: many products are between 0% and 12%.

In the example, the customs value is £450 for the goods plus £220 freight, so £670. At an example rate of 4%, the duty is £26.80.

5. Import VAT

Import VAT is charged at the same rate as VAT on UK sales, usually 20%. HMRC works it out on the customs value plus the duty (gov.uk).

In the example that's 20% of £670 + £26.80, so £139.36.

Whether it's a real cost depends on you:

• VAT registered: you reclaim it. With postponed VAT accounting you can declare and reclaim it on the same VAT return, so you don't pay it out at all.
• Not VAT registered: you pay it and can't reclaim it, so it belongs in your landed cost. Our guide to import VAT when you're not VAT registered explains this in full.

6. UK port, delivery and customs charges

When goods arrive, there are usually charges for handling at the port, delivery to your address or warehouse, and a customs broker to make the import declaration. Couriers often roll these into one "clearance" or "disbursement" fee. In the example they come to £155 for the order (£95 + £60).

These are fixed amounts per shipment, which is why small orders carry a much bigger cost per unit. The same £155 spread over 2,000 mats would be under 8p each.

7. Divide by the number of units

Add everything up and divide by the units you'll be able to sell. If a few always arrive damaged, divide by the number of sellable units, not the number ordered.

Common mistakes

• Comparing the supplier price with the selling price. A $1.20 product selling for £12.99 looks like more than a tenfold markup, but marketplace fees, delivery and VAT come off the selling price too.
• Forgetting import VAT when you're not VAT registered.
• Ignoring fixed charges on small orders. Clearance and delivery fees don't shrink with the order.
• Using a range price. "$0.90 to $1.50" usually means $1.50 at small quantities. Cost it at the price for your order size.

Once you know the landed cost, the next step is what's left after selling fees. For Amazon, see Amazon FBA fees UK, with a worked example.

Sources

Checked on 13 October 2026.

• HMRC: VAT on goods from abroad (imports)
• UK Trade Tariff: look up commodity codes, duty and VAT rates

Fees, tax rates and rules change. Figures were checked on 13 October 2026 against the sources listed above. This guide is general information, not tax or financial advice.