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Costing of Import/Landing Goods

Many kinds of Garments fall in the dark hold due to lack efficiency. When they have no costing idea of imported goods they never understand how to gain garments ub or low. In small and medium business  there are many factors that fluent healthy profits.
One of the main sub parts of the retailing business is the transportation of the purchase goods from your supplier to yours stores. This is the where the concept of the Import Cost comes into play.
Some time in the bigger picture, smaller constraints kike these can be easily over looked but they surely affect the net profit.

So for this reason first of all I would like to know what is costing of imported goods.

What Exactly is Imported Cost ?
Imported cost is the total expenditure in buying a product and shipping charges for importing int to our warehouse.

A part from the cost price of the product imported cost made up of different charges like customs, duties, currency conversion, insurance and other costs up to the destination store.
Depending on the type of industry where our conduct business, the factors to calculate total import cost can vary.

Product Cost:

  • Shipping : Cost associated with crating, packing, handling and freight.
  • Customs : Duties, tariffs, vat, broker fees, harbor fees.
  • Risk        : Insurance, compliance, quality, safety stock cost.
  • Overhead: Purchasing staff, dure diligence cost, travel, exchange rates
  • = Import Cost

Why Should Should we care about Import Cost ?
Analytics of the import cost of a product helps in figuring out the obvious as well a hidden cost price for the retailer. It gives your the insight on the actual amount paid to get your hands on the product.
Thus it is extremely necessary to precisely disintegrate the cost price as it will help the seller to take better decisions.

Without any idea of import cost the store owner will have no choice but to the believe the data in the spread sheets. But knowledge of the different charges accumulated will help him decide the selling price more efficiently.

Its better understand for example show below:

Example :
Let us say you bought a flower vase for $ 50.
And is importing cost $ 15 due to its fragile nature (more than the average transporting cost for the same weight)
The total amount spent by you to get that vase in your store shelf i.e import cost = $ 50+ $15 = $ 65.
This example show how landed cost can affect your selling price decision and how different products can have different costs involved in transportation.

Important of Import Cost :
Import cost unravel the hidden cost and thus help the retailer to sell it an appropriate price. The aim is to make sufficient profits to cover up the extra expenses in importing the product and at the same time very costly to the customers.

Import cost analytics importance follow as below:

  1. Ensure estimated profit on the product by the marketing the price you can sell it with attractive discounts. When total import cost is accurately known, the profit margin per article is optimum.
  2. When the supply chain of the product and expense at all the stages is broken down to calculated import cost. It is easier to figure out the steps a which you can cut yourself some lack. This Way savings can be done where possible.
  3. Precise data on impost cost can make you far-sighted and therefore you take decisions not stole on the purchasing price of a specific product but other factors as well.
Why Difficult to calculation ?
Import cost calculation is not easy if you are running a multi-product store. The companies have to face many issue while determining the total import cost for a product. Some of the factors are incomplete due, lack of time and unreliable resources. 

Other factor which adds to the complexity is the uniqueness of import cost for each and very merchandise. Depending upon the product it has to be calculated differently. Import cost calculation must be flexible and undated time to time. 

Lack of basic knowledge like what has to be included and what not can also cause difficulties.

Calculation of Total Import Cost:
To begin sufficient amount o statistical data on hand is necessary. But the sooner you start developing a import cost calculation model for your business, the faster you get the idea of what parts are missing .
This gives you the next thing to work on rather than sitting idle waiting for complete data. Starting with the basics and then adding on the minute details in the formula are  the way to go.

Let us understand how to calculate the total import cost of a particular shipment.

  • It starts with determining the essential components that make up the total import cost.
  • In inculcates cost price of the product paid to the supplier, freight cost.
  • If the shipment is imported overseas then custom duties and currency factor.
  • Other optional cost are insurance, storage cost etc. Which depend upon the nature of freight. 
Another factor that cause trouble in calculating import cost is the time difference in receiving in shipment and the bill related to additional expenses.

The key here is to have knowledge and experience of the extra cost before they are applied on the way through. This enables you to get the cost almost equal to actual cost.

Once you have the data to start with you can construct your formula for calculating the import cost.

Lets try an Example : 
Let us suppose the shipment of 100 units of a particular product arrives
  • Supplier cost         : $ 20 per unit
  • Duty applicable at: 4%
  • Freight Cost of the entire shipment was $ 200 - and the specific product represents one-quarter of shipment (1/4 of the total shipment)
Total Import Cost = $ 20+(4% x 20) +(200 x 25%) /100 = 20+0.8+.05 = $ 21.3 per unit.
Total Import Cost = Supplier Cost + Duty Charges + Shipment charges specific to his product / total units)

So now you have a clearer idea about how much you spent and what selling price you should fix to get desired profit margin.

We hope this article was helpful and was able to clear your doubts about total import cost.

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