FOB vs CFR Landed Cost Calculator
Compare two supplier quotes for the same import and calculate the total cash required, economic landed cost, and cost per unit. Add freight, insurance, duty, VAT/GST, FX, and itemised destination costs so a lower quote does not hide a higher landed result.
How to use this comparison
FOB means the seller delivers on board at the origin port; the buyer arranges main carriage. CFR includes seller-paid cost and freight to the named destination port, but transit risk transfers when the goods are on board at origin. CIF/customs value commonly means goods plus freight and insurance to the border. A duty rate is the tariff percentage; the tax base is the value to which import VAT/GST is applied.
Inputs
1. Currencies and shipment
Currency used for the supplier quotes.
All comparison results use this currency.
1 supplier unit = 0.80 home units.
Units in this shipment.
3. Customs jurisdiction assumptions
Planning assumptions only—not live legal rates. UK/EU-style adds freight and insurance to customs value; US treatment generally excludes separately identified international freight and insurance.
Controls the customs value used by the duty and tax-base choices.
The amount multiplied by the duty rate.
The amount multiplied by the VAT/GST rate.
Use the rate for the HS classification, origin, and destination.
Enter zero where no import consumption tax applies.
Recovery depends on registration, eligibility, use of the goods, and valid import documentation. It reduces economic cost only; it does not reduce cash required at import.
5. Destination and finance costs
Add only buyer-paid costs not already in a quote. Choose each amount's currency and tick “Tax base” only if local rules include it in import VAT/GST.
Fee subtotal: £0.00
6. Pricing decision (optional)
Enter in home currency, excluding sales tax.
Required price = unit economic cost ÷ (1 − target margin).
Comparison results
Enter both quotes, then compare.
Results use your selected home currency.
| Measure | FOB scenario | CFR scenario |
|---|
Cash outlay includes import tax even when recoverable. Economic landed cost subtracts tax only when “recoverable” is selected.
Detailed cost waterfall and formulas
FX conversion used
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FOB versus CFR decision guide
| Responsibility / cost | FOB | CFR |
|---|---|---|
| Export clearance | Seller | Seller |
| Main sea freight | Buyer | Seller pays to named port |
| Cargo insurance | Buyer if wanted | Buyer if wanted |
| Risk transfer | When goods are on board at origin | When goods are on board at origin |
| Destination handling | Buyer, unless included elsewhere | Buyer, except charges included in seller's carriage contract |
| Import clearance, duty, tax | Buyer | Buyer |
CFR paying freight does not mean the seller retains transit risk. Cost and risk split at different points: the seller contracts carriage to the named port, but risk normally passes on board at origin.
Request this cost breakdown
- From an FOB supplier: goods price, export clearance, origin handling, loading, and the exact named port.
- From a CFR supplier: embedded ocean freight, surcharges, destination terminal charges included/excluded, and the exact named destination port.
- From the forwarder or broker: insurance, brokerage, terminal handling, documentation, port fees, inland delivery, inspection, storage/demurrage, duties, taxes, bank/FX fees, and quote validity.
CFR does not include insurance. Under Incoterms® 2020, CIF normally has limited Institute Cargo Clauses (C) default cover, while CIP requires higher Institute Cargo Clauses (A) or similar cover unless the parties agree otherwise.
Worked FOB and CFR comparisons
Example 1: the lower supplier quote is not the lower landed option
Assume GBP home currency, 100 units, recoverable import VAT, UK/EU-style planning bases, 5% duty, 20% VAT, known insurance of £70 in each scenario, and £650 of taxable destination costs.
| Input / result | FOB | CFR |
|---|---|---|
| Quote | £10,000 | £11,500 |
| Freight (buyer-paid / included) | £2,000 | £1,200 included |
| Customs value | £10,000 + £2,000 + £70 = £12,070 | £11,500 + £70 = £11,570 |
| Duty | 5% × £12,070 = £603.50 | 5% × £11,570 = £578.50 |
| VAT | 20% × (£12,070 + £603.50 + £650) = £2,664.70 | 20% × (£11,570 + £578.50 + £650) = £2,559.70 |
| Cash / economic landed | £15,988.20 / £13,323.50 | £15,358.20 / £12,798.50 |
| Economic cost per unit | £133.24 | £127.99 |
Decision: although £10,000 FOB is the lower supplier quote, CFR is £525 cheaper economically (£5.25 per unit) because its included freight is much lower than the buyer's FOB freight.
Example 2: duty-base jurisdiction matters
For goods of £10,000, freight of £2,000, insurance of £100, and duty at 5%, a CIF-style duty base produces £605 duty (5% × £12,100). A simplified US transaction-value planning base produces £500 duty (5% × £10,000), a £105 difference before any tax effects. Actual additions, deductions, classification, and entry rules must be verified.
FOB, CFR, duty, and landed-cost FAQ
What is included in landed cost?
This calculator includes the supplier quote, buyer-paid freight, cargo insurance, duty, import VAT or GST, and the destination charges you add. It reports both cash required and economic cost after any tax marked recoverable.
Is FOB or CFR cheaper?
Neither is always cheaper. Compare like-for-like landed totals: an FOB quote needs buyer-arranged freight, while CFR includes freight to the named destination port but normally leaves insurance and destination costs to the buyer.
What is the difference between CFR and CIF?
Both include seller-arranged sea freight to the named port. CIF also requires the seller to obtain cargo insurance; CFR does not.
Does CFR include insurance?
No. Under CFR the seller pays freight to the named port, but the buyer normally arranges insurance if cover is wanted.
Who pays destination charges under CFR?
The buyer commonly pays import clearance, duty, tax, and destination charges unless a charge is included in the seller's carriage contract or the sales contract says otherwise. Confirm the carrier and terminal breakdown.
Is duty calculated on FOB or CIF?
It depends on national customs valuation rules. UK and EU-style methods generally add transport and insurance to the border; US transaction value generally excludes separately identified international freight and insurance. Use the relevant customs authority's rules.
Are freight and brokerage included in the VAT base?
Jurisdictions differ. UK import VAT generally starts with customs value, adds duty and certain incidental expenses to the first destination. Use each fee's tax-base checkbox only when the applicable rules require it.
Can import VAT be reclaimed?
Eligible registered businesses may recover import VAT when the import and documentation requirements are met. Mark tax recoverable only after confirming eligibility; recovery changes economic cost, not the cash initially required.
What rate should I use for duty?
Use the rate for the product's customs classification, origin, and destination, including any preference or trade remedy. This calculator does not determine an HS code or live tariff rate.
When should FCA replace FOB?
FCA is often more appropriate when goods are handed to a carrier before loading on board, especially for containerised or multimodal transport. FOB and CFR are intended for sea or inland-waterway shipments.
Methodology, sources, and boundaries
The calculator converts each amount to home currency, separates the CFR freight component from goods value, estimates or accepts insurance, applies the selected duty and tax bases, then adds itemised destination costs. It does not fetch tariff, tax, customs FX, or carrier data.
- ICC: Incoterms® 2020 official overview — allocation of costs, risk, obligations, and CIF/CIP insurance differences.
- HMRC: Customs valuation and working out the import VAT value — UK customs methods and incidental expenses.
- European Commission: Customs valuation — EU transaction-value framework and adjustments.
- US Customs and Border Protection: Commercial invoice value — US price-paid treatment and separately identified freight/insurance.
First published 18 June 2024. Reviewed 16 July 2026. Editorial owner: Starlight Robotics, publisher of Starlight Tools.