A supplier quotes you $2.50 FOB. You do the math — sell at $9.99, that's a 4x margin. Then the goods actually arrive and your real cost is $3.24 per unit. Your margin just quietly lost 30%, and you signed the PO a month before you found out.
FOB means Free On Board — the supplier's cost ends when the crate passes the ship's railing in Ningbo. Everything between that railing and your warehouse is your problem. Most first-time importers can name two of those costs. There are at least seven.
The 7 costs hiding in your FOB quote
1. International freight. LCL sea freight runs $40–80 per CBM to the US West Coast, but for shipments under ~200 kg, air express (DHL/FedEx at $6–9/kg) is often the cheaper and faster choice once you factor LCL minimums. Getting this wrong on small orders costs hundreds.
2. Cargo insurance. 0.3–0.5% of cargo value for all-risk cover. Skippable, until it isn't — one soaked container pays for a decade of premiums.
3. China-side documentation. Export customs declaration, booking, and paperwork are usually bundled into your freight forwarder's quote: $50–120 per shipment. A Certificate of Origin is often +$30–60 if your destination country has a trade agreement with China (ASEAN, RCEP — worth checking before you pay full duty).
4. Import duty. Classified by HS/HTS code. Common consumer goods run 0–12.5% into the US — but Section 301 tariffs stack an extra 7.5–25% on many China-origin categories. Furniture and lighting get hit hard; plenty of electronics sit at 0%. The EU adds its own schedule. This is the single biggest variance item, and the reason "just estimate 10%" kills margins.
5. VAT / sales tax. The EU charges 20–21% VAT on (goods + freight + insurance + duty) — yes, tax on the duty you just paid. The US has no federal equivalent, but state sales tax may apply depending on your nexus.
6. Destination charges. Customs brokerage and last-mile delivery: $75–150 per entry plus delivery. LCL shipments add destination terminal handling that nobody mentions until the invoice arrives.
7. Quality inspection. A third-party inspector (QIMA, SGS, or a local bureau) runs $150–320 per manday at the factory. Skip it and Category 7 becomes "the cost of the shipment you threw away."
Plus the quiet eighth: currency slippage of 1–3% between quote, payment, and resale — and 30–45 days of working capital locked in a container on the Pacific.
Run the numbers before you wire anything
I built a free landed-cost calculator that walks through all of these line items and spits out your true per-unit cost:
https://assassinationss.github.io/calculator.html
Enter your FOB unit price, quantity, freight mode (express/air/LCL sea), destination country, and an HS-code duty rate. You get the full stack — freight, insurance, documentation, duty, tax, destination charges, inspection — as a per-unit landed cost next to your FOB price, with the percentage gap called out.
It's a static page, no backend, no account, nothing leaves your browser. The freight and inspection figures are pre-loaded with real 2026 market ranges, so even a lazy estimate lands within a few percent of the invoice you'd have gotten later.
Example: 1,000 units at $2.50 FOB, LCL sea to the US, 7.5% duty, one inspection day → $3.20 per unit landed. That $0.70 gap is the difference between a healthy margin and a break-even you discover in month three.
Why this matters more than the unit price
The uncomfortable truth: importers negotiate $0.05 off the FOB price while leaving $0.70 of uncontrollable cost unexamined. Then they price their product off the wrong number and wonder why the P&L never matches the spreadsheet.
Three rules the calculator makes obvious:
- Freight mode flips at a threshold. Below ~200 kg, express beats sea once LCL minimums are counted. Above ~500 kg, sea wins by multiples. Your $2.50 quote means different things at different shipment weights.
- Duty rate can swing landed cost more than any negotiation. 0% vs 25% on the same product is $0.63 per unit at this size — more than most people ever negotiate off FOB.
- Inspection is 1–2% of order value. It is the cheapest insurance in the entire stack.
The rest of the toolkit
The calculator is one of four free tools I've shipped for China sourcing workflows:
- Red-flag checker — 12 questions that score a supplier before you wire a deposit: https://assassinationss.github.io/checker.html
- Supplier email decoder — what "no problem, we can do that" actually means: https://assassinationss.github.io/decoder.html
- CNY 2027 deadline planner — Chinese New Year is 11 days early next year; this tells you your last safe order date: https://assassinationss.github.io/cny-deadline.html
If you want the full six-step supplier verification system with templates, the China Sourcing Playbook is here: https://github.com/assassinationss/awesome-china-sourcing
Feedback welcome — especially if a line item's real-world cost differs from what you're seeing, the ranges get sharper with every data point.
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