Guide · Costs
Two suppliers quote the same machine. One says USD 18,400 FOB Ningbo, the other USD 21,900 CIF Le Havre. Which is cheaper? You cannot tell from the quotations. Landed cost — the total amount it takes to place the goods in your warehouse, ready to sell — is the only number that answers the question, and a well-built proforma invoice contains almost everything you need to calculate it.
Updated 17 October 2026 · 4 min read
From the guide to the document
Your proforma with these details, ready as a PDF.
The rule tells you which of those lines are already inside the supplier’s price. Under FOB, origin charges and export clearance are included but freight, insurance and everything at destination are yours. Under CIF, freight and insurance to the named port are included — but destination terminal handling, clearance, duty and delivery are still yours, and risk transferred to you back at the port of loading. Under DDP, in principle everything is included, which is why DDP quotes look expensive until you build the comparison properly. The Incoterms 2020 guide sets out each rule’s cost allocation.
Duty depends on two things: the HS code and the country of origin. The code gives you the rate in your national tariff; the origin tells you whether a trade agreement lowers it and whether any anti-dumping or safeguard measure raises it. Both must be on the proforma invoice — see the HS code guide. Note also what base the duty is applied to: many countries assess on a CIF value, so freight and insurance are dutiable even when you paid them separately.
One 40-foot container of finished goods, duty 4.7%, VAT 20% recoverable, delivered to a warehouse in northern France. Amounts in USD.
| Cost line | Supplier A — FOB Ningbo | Supplier B — CIF Le Havre |
|---|---|---|
| Goods | 18,400 | 21,900 (freight and insurance included) |
| Origin charges and export clearance | included in FOB | included |
| Ocean freight | 2,850 | included |
| Marine insurance | 190 | included |
| Customs value (CIF) | 21,440 | 21,900 |
| Duty at 4.7% | 1,008 | 1,029 |
| Destination terminal handling and clearance | 620 | 620 |
| Delivery to warehouse and unloading | 540 | 540 |
| Bank and currency costs | 230 | 150 |
| Landed cost excluding recoverable VAT | 23,838 | 24,239 |
Supplier A is cheaper by roughly 1.7%, not by the 16% the headline prices suggested. And the comparison is still incomplete: if Supplier A’s transit is two weeks longer, the extra stock you must hold has a cost, and if their packaging is weaker, the damage rate does too.
Most containers hold several products with different duty rates. Allocate shared costs — freight, terminal handling, clearance — across lines using a consistent driver, then apply duty line by line at the correct rate:
Pick one method and keep it. Switching between them between quarters makes your margin analysis meaningless.
Those are exactly the fields on our proforma invoice template. If your supplier’s document is missing them, send them the template — it saves both sides a week.
Divide the landed cost by the number of saleable units — not by the units shipped, if breakage is normal for your product. Then add your operating cost and target margin. Rerun the calculation whenever freight rates move sharply or a trade measure changes, because both can shift a product from profitable to marginal without anything happening on the supplier side.
Related reading: what a proforma invoice is, the export documents checklist, and country import requirements. To issue the proforma itself, create a free account: write the HS code and origin in each line, and the Incoterms rule in the note.
Read next
EXW to DDP explained with a worked cost table: who pays freight, insurance and duty, where risk passes, and what changed from Incoterms 2010.
How Harmonized System codes are built, what the six digits mean, the rules that settle classification disputes, and a practical method for finding your code.
What the EU, US, Gulf, Nigeria, Kenya, North Africa and India expect before shipment: licences, exchange control and pre-shipment inspection.
Six documents, one app
One customer file, one product list and your own layout serve all six documents. An accepted quote or proforma becomes an invoice without retyping.
1. The price
QUO-2026-0012
Your price for the job, with a validity date and space for the buyer to accept it.
2. The firm offer
PI-2026-042
What your buyer’s bank, their forwarder or their purchasing team asks for before the order.
3. The order
PO-2026-0007
What is ordered, how many and for which delivery date, signed by the buyer.
4. The delivery
DN-2026-0007
It travels with the goods; the consignee signs it and writes down any reservation.
5. The sale
INV-2026-0031
The accepted proforma or quote becomes the invoice, with the same lines and currency.
6. The payment
REC-2026-0019
Proof of a payment, linked to its invoice, with the method and the balance still due.
3 free documents to try it, no card required.
Three free documents, no card required. Your tax IDs, bank details and payment terms are typed once, then printed on every PDF.
3 free documents · no card required