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Methodology

International Landed Cost & Margin Planner methodology

Allocate shipment costs by units, supplier value or weight and test an adverse exchange rate.
Duc Nguyen X.By Duc Nguyen X.· Founder, Margin101Last reviewed: View update historyMethodology

Educational only: Business decision support, not accounting, tax or legal advice.

Privacy: Calculations run locally; Margin101 does not receive your commercial inputs.

Update policy: Reviewed when formulas or official dependencies change.

Scope: Market-neutral small-business planning using your own assumptions.

1. Formulas and units

Allocation Share
allocationShare = selected item basis / matching shipment total

Where

totalShipmentUnits
Total shipment units (operational units)Source: Business record
allocationBasisCode
Allocation basis (declared scenario value)Source: Business record
allocationShare
Allocation Share (decimal rate)Source: Calculated output
Allocated Logistics Domestic
allocatedLogisticsDomestic = allocation share × shipment logistics cost

Where

totalShipmentUnits
Total shipment units (operational units)Source: Business record
allocationShare
Allocation Share (decimal rate)Source: Calculated output
allocatedLogisticsDomestic
Allocated Logistics Domestic (currency units, ex tax)Source: Calculated output
Current Landed Unit Cost
currentLandedUnitCost = current-FX (supplier value + allocated freight, insurance and brokerage + duty + non-recoverable import tax) / saleable units

Where

itemSupplierValueForeign
Item supplier value (foreign supplier currency units, ex tax)Source: Business record
totalShipmentValueForeign
Total supplier value (foreign supplier currency units, ex tax)Source: Business record
currentLandedUnitCost
Current Landed Unit Cost (currency units, ex tax)Source: Calculated output
Adverse Landed Unit Cost
adverseLandedUnitCost = adverse-FX (supplier value + allocated freight, insurance and brokerage + duty + non-recoverable import tax) / saleable units

Where

itemSupplierValueForeign
Item supplier value (foreign supplier currency units, ex tax)Source: Business record
totalShipmentValueForeign
Total supplier value (foreign supplier currency units, ex tax)Source: Business record
adverseLandedUnitCost
Adverse Landed Unit Cost (currency units, ex tax)Source: Calculated output
Current Required Price
currentRequiredPrice = current landed cost / (1 − target margin)

Where

targetMarginRate
Target margin (decimal rate)Source: Business record
currentLandedUnitCost
Current Landed Unit Cost (currency units, ex tax)Source: Calculated output
currentRequiredPrice
Current Required Price (currency units, ex tax)Source: Calculated output
Adverse Required Price
adverseRequiredPrice = adverse landed cost / (1 − target margin)

Where

targetMarginRate
Target margin (decimal rate)Source: Business record
adverseLandedUnitCost
Adverse Landed Unit Cost (currency units, ex tax)Source: Calculated output
adverseRequiredPrice
Adverse Required Price (currency units, ex tax)Source: Calculated output
Price Buffer
priceBuffer = adverse required price − current required price

Where

currentRequiredPrice
Current Required Price (currency units, ex tax)Source: Calculated output
adverseRequiredPrice
Adverse Required Price (currency units, ex tax)Source: Calculated output
priceBuffer
Price Buffer (currency units, ex tax)Source: Calculated output

Money inputs and outputs use the currency selected in the scenario without changing the canonical methodology. Rates, margins, utilisation and buffers are entered as percentages and converted to decimal values for calculation.

2. Worked example

Input assumptions

The worked rows below come directly from the registered engine and visible default fixture.

Calculation and outputs

Example

The worked rows below come directly from the registered engine and visible default fixture.

Allocation Share
20%
Allocated Logistics Domestic
500 currency units
Current Landed Unit Cost
37.47 currency units
Adverse Landed Unit Cost
40.68 currency units
Current Required Price
57.65 currency units
Adverse Required Price
62.59 currency units
Price Buffer
4.95 currency units

The exact engine-derived outputs are shown in the labelled rows below.

Interpretation

The adverse-FX required price includes the selected shipment allocation, duty, non-recoverable import tax and wastage assumptions.

3. Validation and boundary checks

  • The non-recoverable import-tax base includes supplier value, allocated freight, insurance and brokerage, plus duty, at both current and adverse exchange rates.
  • All values must be finite and inside the visible validation boundaries.
  • Rates are entered as percentages and calculations retain decimal precision.
  • Money uses one consistent ex-tax currency and planning period.

4. Assumptions and source classification

  • Import-tax treatment is a user-entered neutral scenario. Confirm whether brokerage and each logistics component belong in the statutory base for the relevant jurisdiction before relying on the result.
  • Provider fees, exchange rates, return behaviour and operating performance are user-entered scenarios.
  • No provider plan, jurisdiction, tax rate or market benchmark is embedded.
  • The engine retains full precision and display formatting never feeds back into calculation.

This planner has no current policy-data dependency. Its commercial assumptions are user supplied. Registered family-level regression suites exercise the shared business-logic engine and worked-result reconciliation.

5. Limitations

  • The model does not forecast demand, provider changes, exchange rates or operational performance.
  • It does not replace accounting, tax, legal or financial advice.
  • The planner does not classify goods, determine origin, choose an Incoterm or establish customs value, duty, import-tax liability or recoverability.

This is educational decision support, not tax, accounting, legal or financial advice. Check the treatment of your actual transactions under the rules that apply to your business and seek qualified advice where appropriate.

6. Update and evidence policy

Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. There is no official threshold or benchmark to refresh for this planner. Commercial inputs remain user-supplied because they vary by business and contract.

Change history

  1. : Initial public release of the International Landed Cost & Margin planner and methodology.

Related reading

Guides to interpret the decision and its assumptions.

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