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Cost calculation for imports

This information is provided by:Netherlands Chamber of Commerce, KVKNetherlands Chamber of Commerce, KVKNederlandse versie

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.

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

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

Total profit 500 cages at € 19.70€ 9,850
Sales price per cage

€ 63.20

An appropriate selling price covers all costs: direct and indirect.

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