Contract Manufacturing Cost Calculator
True landed cost per unit.
Calculate contract manufacturing landed cost per unit including production, tooling, shipping, and import duty. Free educational tool.
What this tool does
Landed cost per unit from a contract manufacturer combines manufacturing, tooling amortised across the order, shipping, and import duty into a single per-unit figure. You enter the order quantity, per-unit manufacturing cost, tooling allocated per unit, shipping per unit, and import duty percentage. The calculator then estimates your total landed cost and breaks it down to a cost per unit. Manufacturing cost typically has the largest impact on the final figure, though tooling and duty can shift the result meaningfully depending on order size and supplier location. This calculation is useful for comparing quotes from different manufacturers or modelling how order volume affects unit economics. The result assumes duties apply only to the manufacturing component and does not account for brokerage fees, local taxes, or storage costs that may apply in your situation.
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Formula Used
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Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
Contract manufacturing cost is more than the factory quote. Landed cost includes per-unit manufacturing, amortized tooling, ocean/air shipping, and import duties. Most product founders focus only on unit cost and get surprised when landed cost runs (commonly cited at 30-60%) higher than the factory quote due to shipping and duties.
5,000 units at 8/unit manufacturing + 2/unit tooling amortization + 1.50/unit shipping = 11.50/unit before duty. Import duty typically 3-12% depending on product category, applied to manufacturing + shipping value. At 8% duty: 0.76/unit extra. Total landed cost 12.26/unit. Most factory quotes show only 8/unit - the 4+ gap is where founders go wrong on margin math.
Tooling amortization matters for small runs. 20,000 tooling for 5,000 first order = 4/unit. Second order of 5,000 uses same tooling = 0/unit more. So first order true cost much higher; subsequent orders drop significantly. Factor this when pricing first-run vs re-order to avoid either overpricing first run or underpricing re-orders.
Run it with sensible defaults
Using units per order of 5,000, per-unit manufacturing cost of 8, tooling per unit of 2, shipping per unit of 1.5, the calculation works out to 12.14. The defaults are meant as a starting point, not a recommendation.
The levers in this calculation
The inputs — Units per Order, Per-Unit Manufacturing Cost, Tooling per Unit, Shipping per Unit, and Import Duty % — do not pull with equal force.
How the math works
Base = units × (mfg + tooling + shipping). Duty = units × mfg × duty %. Total = base + duty. Per-unit landed = total ÷ units.
What to do with a low result
A disappointing result is information, not a judgement. Pick the single input that dragged the figure down most and focus the next quarter on that one factor. Breadth-first improvement rarely works; depth-first on the worst input usually does.
What this doesn't capture
The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.
5,000 units × (££8 + ££2 tooling + ££1.5 ship) + 8% duty = 12.14.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
Base = units × (mfg + tooling + shipping). Duty = units × mfg × duty %. Total = base + duty. Per-unit landed = total ÷ units.
References
Frequently Asked Questions
Why is landed cost so much higher than factory quote?
Tooling cost per unit?
How to reduce import duty?
Ocean vs air shipping?
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