Landed cost is the only number that can be compared across routes. On most projects the factory price is 55–65% of it; freight, duty, clearance and installation make up the rest. A quote that compares factory prices across countries is comparing the smallest variable. Convert every quote to landed cost at the same specification, incoterm and installation scope before deciding.
Factory price is 55–65% of landed cost on most routes.
Freight is 8–12%, duty 5–25%, clearance 5–8%, installation 10–18%.
Compare per unit at the same incoterm and scope, never per container.
30% deposit and balance before loading is normal; hold a retention against inspection.
Financing cost belongs in the model, not outside it.
1. What landed cost includes
Landed cost has seven lines: factory price, freight, insurance, duty, clearance, delivery and installation. Each behaves differently. The factory price scales with specification; freight scales with volume and route; duty scales with value and origin; installation scales with site conditions. A model that treats them as one number cannot answer the question that matters: which route is cheaper for this project.
2. The factory price line
The factory price is the easiest line to quote and the easiest to misread. It usually excludes packaging upgrades, hardware brand upgrades and testing. Ask what is included before comparing. A price that excludes Blum hardware or export packing is not comparable with one that includes them.
Order size changes the unit price because setup and tooling are fixed. Above about 30 units the curve flattens; below 10 units the fixed costs dominate. The MOQ guide explains where the breakpoints usually sit.
3. Freight and insurance
Freight is 8–12% of landed cost on most routes, but it varies more than that between routes. A 40 ft high-cube to the US West Coast is not priced like one to Jeddah, and a flat-pack container carries 40–60% more units than an assembled one. Insurance is small but should be explicit, because a claim without cover is a write-off.
4. Duty, VAT and tariff exposure
| Market | Duty | Note |
|---|---|---|
| United States | 25% | Section 301 on Chinese cabinets |
| United Kingdom | 0–5% | Plus 20% VAT, usually recoverable |
| Canada | 0–20% | Anti-dumping can change the rate |
| Australia / NZ | 0–5% | Plus GST, usually recoverable |
| GCC | 5% | Plus VAT where applicable |
The duty line is where quotes most often mislead. A factory quote is usually ex-works or FOB, so duty is not in it. Add it before comparing.
5. Clearance, delivery and installation
Clearance and delivery run 5–8% of landed cost, and installation 10–18%. Both are site-dependent. A city apartment with no laydown area costs more to deliver and install than a suburban house. Installation scope also varies: some quotes include doors and adjustment, some stop at carcasses. Compare the scope, not just the number.
6. Payment terms and cash flow
30% deposit and the balance before loading is the common structure. That means cash leaves your account about ten weeks before the container arrives. Model the financing cost at your cost of capital; on a 16-week cycle it is a real line. Hold a retention until the pre-shipment inspection is signed off, and never pay the balance on a photo.
7. A per-unit model
| Line | Per unit | Share |
|---|---|---|
| Factory price | $2,800 | 62% |
| Freight and insurance | $450 | 10% |
| Duty | $700 | 16% |
| Clearance and delivery | $280 | 6% |
| Installation | $270 | 6% |
| Landed cost | $4,500 | 100% |
The numbers are illustrative, but the proportions are typical for a mid-spec apartment kitchen on a 25% duty route. Change the duty to 5% and the factory share rises to about 70%.
8. Comparing two quotes
Convert both quotes to landed cost at the same specification, incoterm and installation scope. Then compare per unit. A lower factory price can lose on duty, freight or scope. The lead time guide covers the schedule side, because a cheaper route that arrives two weeks late is not cheaper.
9. A checklist before you commit
Before you sign, confirm six things: the board grade, the hardware model, the finish system, the packing standard, the inspection scope and the payment schedule. Each should be in writing, not in a call. The quote checklist turns the six into a one-page comparison.
10. Common mistakes
The most common mistake is comparing a factory price with a landed cost. The second is leaving the inspection out of the budget. The third is paying the balance before the inspection is signed off. Each is avoidable with a written scope and a pre-shipment inspection.
Frequently asked questions
What is landed cost?
Landed cost is the total cost of getting a cabinet to site: factory price, freight, insurance, duty, clearance, delivery and installation. It is the only number that can be compared across routes.
Why is the factory price only two-thirds?
Because freight, duty, clearance and installation add 35–45% on most routes. A quote that compares factory prices across countries is comparing the smallest variable.
How do I compare two quotes fairly?
Convert both to landed cost at the same specification, incoterm and installation scope. Then compare per unit, not per container. A lower factory price can lose on duty or freight.
What payment terms are normal?
30% deposit and the balance before loading is common. Some factories accept a retention against inspection. Never pay the balance before the pre-shipment inspection is signed off.
Does order size change the unit cost?
Yes. Setup, tooling and freight fixed costs spread over more units. Above about 30 units the curve flattens; below 10 units the fixed costs dominate.
How do I include financing cost?
Model the cash tied up from deposit to installation, at your cost of capital, and add it to the landed cost. On a 16-week cycle it is a real line, not a rounding error.
