Definition
What is landed cost?
Landed cost is the total amount a buyer pays to receive a product at their door: the price, the shipping, the applicable taxes and the customs duties. It stands against the displayed price, which represents only part of it. The distinction becomes decisive the moment a border is crossed, because the gap between the two amounts can then appear after the purchase, when the seller no longer has any control.
What landed cost adds up
Landed cost starts from the product price. It adds shipping, applicable taxes, customs duties when the parcel crosses a border, and brokerage fees (what the carrier or broker charges for handling customs).
In a sale within Quebec, almost everything is visible at checkout: price, shipping and sales taxes. In a sale abroad, duties and brokerage fees can be claimed at delivery, sometimes several weeks after the purchase. The customer has paid one amount and then discovers a second.
Why the gap costs more than the amount
A customer who discovers duties at the door has three possible reactions. They pay, feel misled and never buy again. They refuse the parcel: you absorb the outbound trip, the return trip and the tied-up product. Or they dispute the charge with their card issuer, which costs you more than the sale.
For shipments to the United States, this scenario has become the normal path for any unprepared shipment. The American $800 exemption has been suspended since August 29, 2025, and customs wrote that suspension into its regulations on June 24, 2026. Every low-value shipment now goes through the entry procedures and carries duties, taxes and fees.
The unhappy customer's departure shows up on no dashboard. Your conversion rate can stay stable while your repeat purchase rate falls.
The three ways to handle the gap
- Collect at checkout. You calculate duties and taxes at the time of purchase: the buyer sees the full landed cost and nothing is claimed at delivery. Your conversion rate drops a little, because the displayed amount goes up. Refusals, returns and chargebacks drop a lot.
- Let the customer pay on delivery. Nothing changes in your checkout and the problem passes to the customer. It is the default path, the one you choose without choosing it.
- Absorb it in the price. You raise your displayed price for that market and take the duties on yourself. Simple for the buyer, costly for your margin.
The choice is made by product line, not once for the whole catalogue. A low-value, high-margin product can absorb the duties. A heavy or low-margin product is better served by collecting at checkout.
The data you need to calculate it
Calculating a duty takes two pieces of information per SKU: the product's tariff classification and its country of origin. These two fields rarely exist in an online store's product records. When they exist, they live in the management system or in import documents.
The country of origin is where the product was made, not the warehouse the parcel ships from. An item made elsewhere and stored in Quebec does not become Canadian because it ships from here. That distinction changes the applicable rate: have it validated by a customs broker.
Landed cost = product price + shipping + applicable taxes + customs duties + any brokerage fees
Duties depend on each product's tariff classification and country of origin. Check the rate with a customs broker, not in an article: a classification error is paid for in penalties.
Fictional example: a Quebec store sells an item for $140 to an American customer (all amounts are in US dollars). Shipping costs $18, and the customer discovers $21 in duties and taxes plus $9 in brokerage fees at the door. The landed cost reaches $188, 34% more than the price they saw.
If the store collects these amounts at checkout, the customer sees $188 before buying. They may walk away, but the customer who does buy will not refuse the parcel.
We treat landed cost as a management decision, not a store setting. The question is who pays and when, more than how much. It touches margin, return policy and the customer relationship. A duty announced before the purchase costs a few points of conversion. The same duty discovered at delivery can cost the customer, the parcel and the review.
We start with three figures taken from your systems: the number of orders to the target market over twelve months, their average value and the number of parcels refused or returned over the same period. Setting up the checkout then takes a day. The real work is in your product data, starting with the SKUs that make up most of your sales abroad.
Not to be confused with
- Presentment price
- The presentment price is the amount a buyer sees in their own currency, before any shipping, tax or duty calculation. Landed cost is what they pay in total to receive the product, once everything is added up.
- Guaranteed final price
- A guaranteed final price is a seller's commitment: the amount shown at checkout is the last one the buyer will pay. Landed cost is the amount itself, whether or not the seller guarantees it is complete.
- Cost of the border
- The cost of the border is what the business spends because it sells abroad: customs, compliance, acquisition, management time. Landed cost is measured on the buyer's side, order by order.
Related concepts
- Presentment price
- Guaranteed final price
- Drip pricing
- Price display point
- Full cost of a return
- Cost of the border
- Cart abandonment
- Secondary market
Further reading
- The end of U.S. de minimis: adapting your checkout
- International sales: clarifying shipping, taxes and returns
- Multi-currency sales: setting prices, rounding rules and margins
- Tariff changes: updating prices across your website and sales channels
- eCommerce returns: calculating their cost and reducing them
- Entering the U.S. market: costs and priorities for Quebec businesses
Related services
Frequently asked questions
Who pays the customs duties when I sell to the United States?
You decide. You can collect them at checkout, leave them to the customer to pay on delivery, or absorb them in your price. Without a decision, the customer discovers them at the door: that is the path that produces refused parcels and negative reviews.
Will showing the full landed cost lower my sales?
Your conversion rate can drop by a few points, because the displayed amount goes up. Refused parcels, returns and chargebacks drop a lot. The trade-off is between a visible measure and an invisible one.
Is a product shipped from Quebec considered Canadian?
Not necessarily. The country of origin is where the product was made, not the warehouse the parcel ships from. The distinction changes the applicable duty rate: have it validated by a customs broker.
