For Philippine businesses, profitability is determined long before a product sells. The final price is set when you accurately calculate the true landed cost Philippine imports. This cost is more than just the product’s price tag. Instead, it is the total cost of bringing a product from the supplier’s door to your warehouse door. Accurately calculating this total cost is crucial. It ensures you set correct retail prices and maintain profit margins.
The Three Main Pillars of Landed Cost
You must factor in three primary categories of expense to calculate your total landed cost. Ignoring any of these will lead to underestimated costs and lost profits.
1. Product Costs (The Price Tag): This is the basic price. This includes the supplier’s wholesale cost and any packaging fees.
2. Transportation and Logistics: This covers all costs associated with moving the goods. This includes freight charges, handling fees, and insurance.
3. Customs, Duties, and Taxes: This covers all government-mandated fees. These include import duties, excise taxes, and Value-Added Tax (VAT).
Detailed Calculation: Beyond the Invoice
Accurate calculation of landed cost Philippine imports requires attention to detail. Therefore, gather documentation carefully.
Freight Charges: Freight fees depend on the shipping method. Ocean freight charges usually vary based on container volume (CBM). Air freight is based on dimensional weight.
Local Charges: Terminal handling charges and local trucking fees apply upon arrival.
Insurance Costs: Always insure your cargo. The insurance premium is a small fraction of the total cost. In addition, it provides critical protection against major loss.
The Impact of Duties and VAT
Duties and VAT often represent the largest hidden variable in landed cost Philippine imports. These fees are unavoidable.
Import Duties: The rate is determined by the Harmonized System (HS) code of the product. The BOC uses this rate to assess the import duty. Therefore, correct HS classification is essential.
VAT: A 12% Value-Added Tax is charged on the total customs value. The customs value includes the price, freight, insurance, and import duties.
Ensuring True Profitability
Accurate landed cost calculation is a strategic necessity. By factoring in every variable, you ensure true profitability. Use a reliable partner like HBK Global Trading. They provide transparent logistics costs. This eliminates guesswork in your landed cost Philippine imports.
