The cheapest unit price is not always the cheapest purchase. A quote can leave out freight, import charges or delivery to your site, while another includes them. Before awarding an international order, bring every offer onto the same delivery and cost basis. This guide separates the supplier’s price from the costs you still need to pay, without pretending that one universal duty rate applies everywhere.
Start with a shared buying specification
Compare the same quantity, material, dimensions, tolerances, packaging and delivery destination. Record the quote currency, validity date and payment terms. An alternative material or a longer lead time may be acceptable, but it belongs in a separate comparison rather than being treated as an identical offer.
State the Incoterms® rule, named place and edition. Incoterms® 2020 allocate specified obligations, costs and risks between the parties; they do not set tariff rates, settle ownership or replace your sales contract. Ask suppliers to identify exactly which charges their price includes.
Build the landed-cost worksheet
The U.S. International Trade Administration describes landed cost as including the product price, insurance, freight, tariffs, taxes and other fees. Your worksheet should identify who pays each item and whether the amount is confirmed, estimated or still missing.
- Goods: quantity × unit price, plus separately charged tooling or setup.
- Origin costs: packaging, inland transport, export handling and documentation not already included.
- Main transport: freight, insurance and any applicable surcharges.
- Destination costs: customs brokerage, terminal handling, import duty, taxes and local delivery.
- Other purchasing costs: inspection, payment charges and any specifically agreed storage or financing costs.
Worked example: the lower unit price loses
This is an invented USD example, not a market quotation or a destination-specific tax calculation. Assume both offers supply 1,000 identical units to the same warehouse, with no additional costs beyond those listed.
Supplier A: goods $8,000 + freight and insurance $1,400 + assumed import duty $600 + brokerage and local delivery $500 = $10,500, or $10.50 per unit.
Supplier B: goods $8,600 + freight and insurance $900 + assumed import duty $645 + brokerage and local delivery $250 = $10,395, or approximately $10.40 per unit. B’s goods cost $600 more, but its modelled delivered total is $105 lower.
The duty amounts are illustrative inputs, not a rate to reuse. Taxes, recoverability and cash-flow effects are deliberately outside this simplified example. In a real comparison, show recoverable import tax separately from non-recoverable cost and confirm its treatment with your adviser.
Customs value is not your spreadsheet total
The World Customs Organization explains that the WTO valuation system primarily uses transaction value—the price paid or payable for goods sold for export—subject to specified adjustments. Other valuation methods apply when that method cannot be used.
Do not automatically calculate duty on either the supplier invoice or your entire landed-cost total. Classification, origin, valuation adjustments and destination rules matter. Freight and insurance treatment is not identical in every jurisdiction; obtain the applicable basis and rate from the customs authority or a qualified broker.
Keep uncertainty visible before awarding
Use one exchange-rate date for the comparison, retain the original quote currency and label the converted amount as an estimate. A comparison rate is not a bank’s guaranteed settlement rate. Ask for missing charges rather than replacing them with zero.
Alongside total cost, compare lead time, inspection requirements, supplier evidence and payment exposure. A small apparent saving may not justify a delivery risk you cannot absorb. On Quotendra, record the common specification and delivery basis in the RFQ and ask suppliers to separate their line-item prices. Confirm all excluded costs before accepting a quote.
Sources & further reading
Buyer guides
Short, field-tested guides for procurement teams: how to write a request suppliers can price accurately, and how to compare the quotes that come back.