Ask most importers what a product costs them, and they will quote the supplier invoice. Ask what it actually costs to have that product sitting sellable on a shelf in Nairobi, and the answer is usually a guess — and often a low one. The gap between those two numbers is landed cost, and it is where a surprising amount of margin quietly disappears.
What actually sits inside landed cost
Individually, none of these look large. Stacked together, they routinely add 25 to 40 percent on top of the invoice price — and that range moves depending on the product's duty classification, the exchange rate on the day of clearing, and how efficiently the shipment actually moves through customs.
Why the invoice price is the wrong number to price against
A business that prices its products against the supplier invoice is, in effect, pricing against a number that was never going to be its real cost. The margin it thinks it is protecting is smaller than it appears — sometimes considerably smaller — because the landed cost calculation was never actually done, or was done once, informally, and never revisited as duty rates, freight rates or the exchange rate moved.
This matters most exactly where it is least visible: in the products that look most profitable on paper. A high invoice margin can mask a landed cost problem for a long time, because the business is still making money — just less than it believes, on a base that is more fragile to currency and freight movements than management assumes.
Getting the number right, once, properly
A landed cost review isn't complicated in principle — it is a matter of tracing every cost between the supplier's invoice and the product actually being sellable, and testing whether the customs valuation being used is defensible. What it requires is discipline and a reason to sit down and do it properly, rather than carrying forward an estimate nobody has checked in two years.
Once that number is right, pricing decisions change — not because the business is doing anything differently, but because it is finally looking at its actual cost rather than a fraction of it.