Cost calculation for imports
Cost calculation for imports will help you set a good selling price. Here is what to look out for.
Setting a selling price
Suppose you bought Buddha figurines for the equivalent of €1 each in Thailand. What should you sell them for in the Netherlands? Calculating costs, also known as costing, provides insight into the costs you incur to bring the product to the Netherlands and what you need to charge to turn a profit.
Why calculate costs?
Looking to import goods? If so, you probably already have an idea of who you want to sell your products to. But before you can set a price, you need to figure out all your costs, including costs for warehouse storage and transport insurance, for example. If you want to turn a profit, your price has to cover all your costs.
What goes into costing?
A cost price consists of direct and indirect costs. Direct costs are costs directly associated with the product, such as the purchase price, transportation costs and import duties. Indirect costs include your fixed operating costs, such as advertising budget, travel expenses, and the salary you pay your staff. Adding all these costs together gets you your total cost price.
Calculating import costs
Import costs differ per country and per product. The import duties for products made in Indonesia, for example, are often lower than those for products made in China. In addition to import costs, you may also have to pay inspection fees for products that pose a high safety risk.
Do I have to pay import duties?
Does the product come from the EU? Then you do not pay import duties. There is free movement of goods in the EU.
Does the product come from outside the EU? Then the main rule is that you do pay import duties. The amount depends on the product's TARIC code.
However, there are exceptions to this main rule. These are a few of the exceptions: You do not pay import duties for exempt products, such as books, laptops, and phones. Also, most products from Türkiye are exempt from import duties. You will then need proof of Turkish origin.
You also pay fewer or no import duties for products from countries with a trade advantage. A trade advantage may come from a trade agreement or a special arrangement. You will then need proof of country of origin.
Costing example
Suppose you buy 500 bird cages from China every 2 months. What are your costs and what price should you set in order to turn a profit?
| Direct costing | |
|---|---|
| Purchase 500 birdcages in China at € 20 |
€ 10,000 |
| Marine transport cost |
€ 1,000 |
| Insurance cost |
€ 150 |
| Customs value |
€ 11,150 |
| Import duty 2.7% |
€ 301.05 |
| Purchase value |
€ 11,451.05 |
| Purchase costs per cage (€ 11,451.05/500) |
€ 22.90 |
| Sales price per cage |
€ 42.60 |
| Profit per cage |
€ 19.70 |
| Total gross profit (500 cages at € 19.70) |
€ 9,850 |
Indirect costs
This example does not factor in fixed annual operating costs. Such as storage space rental, car costs, phone costs, business insurance, gas, water, and electricity, salaries, and interest payments. All figures are exclusive of VAT. At 3,000 cages sold every year, your indirect costs would be as follows:
Fixed costs per year €61,800. Indirect costs per cage €61,800 / 3,000 = €20.60
| Total costing | |
|---|---|
| Purchase costs per cage |
€ 22.90 |
| Indirect costs per cage |
€ 20.60 |
| Total costs per cage |
€ 43.50 |
| Profit margin per cage |
€ 19.70 |
| Sales price per cage |
€ 63.20 |
An appropriate selling price covers all costs: direct and indirect.