Short answer: activewear landed unit cost is not the factory unit price. Add every non-recoverable cost attributable to bringing the order to your chosen destination and saleable condition, then divide by the number of sellable units actually received. Keep recoverable import VAT or GST, reusable component surplus and launch marketing visible on separate lines so you can see both true product cost and total cash required.
This guide is a planning framework, not a freight quote, customs ruling, tax opinion or accounting policy. Duty, tax, customs value and importer obligations depend on the product classification, origin, destination, transaction and current law. Confirm them with the relevant customs authority, broker and tax adviser before approving an order.
Six numbers that buyers often confuse
One spreadsheet should not use “cost” to mean six different things. Define the number before comparing suppliers or setting a selling price.
| Number | What it answers | What it does not answer |
|---|---|---|
| Factory unit price | What is charged for one garment under the quoted specification and trade term? | Total cost at your warehouse |
| Product subtotal | What do all ordered garments cost under that quote? | Development, logistics, duty or losses unless expressly included |
| Customs value | What value will the authority use as the basis for customs purposes? | Your complete commercial landed cost |
| Landed order cost | What non-recoverable, order-attributable cost brings this order to the stated endpoint? | Total launch budget or future operating costs |
| Landed unit cost | How much landed order cost sits behind each sellable unit received? | Marketplace fees, customer delivery, returns, advertising or profit |
| Cash required | How much money must be available, and when? | Final expense after recoveries, credits or reusable stock are recognised |
The WTO Customs Valuation Agreement generally starts customs valuation with the transaction value—the price actually paid or payable—plus required adjustments. That is a legal customs calculation. It is not permission to declare only a convenient factory number, and it is not the same as a management-accounting landed-cost worksheet.
The first-order landed-cost formula
Use one currency and write the exchange-rate source and date beside the calculation.
Landed order cost = product subtotal + allocated development + consumed branding and packaging + inspection/testing + logistics and insurance + non-recoverable customs, duty and tax + other order-attributable delivery costs − confirmed credits
Then calculate:
Landed unit cost = landed order cost ÷ sellable units actually received
For cash planning, add deposits, potentially recoverable import tax, reusable component surplus and any other timing items that require cash but are not fully consumed by this order:
Cash required = cash paid before and at receipt − credits already received
Do not force cash required to equal landed order cost. A payment can be real cash today without being the final expense of this order.
Copyable 16-line landed-cost worksheet
Create one column for estimate, one for quoted/contracted, one for actual, and one for the supporting document. Never hide uncertainty inside a single “miscellaneous” percentage.
| Line | Cost input | Evidence to request | Landed cost, cash, or separate? |
|---|---|---|---|
| 1 | Garment quantity × quoted unit price | Quotation, specification and trade term | Landed cost and cash |
| 2 | Paid samples and pattern/development | Sample invoice and agreed allocation policy | Allocate deliberately; cash may occur earlier |
| 3 | Fabric, dye, print, mold or program setup | Supplier breakdown | Landed if consumed by this order |
| 4 | Logos, labels, hangtags and packaging consumed | Component quote and actual usable quantity | Landed if consumed |
| 5 | Reusable or surplus branded components | Paid quantity, consumed quantity and controlled balance | Cash now; allocate across benefiting orders |
| 6 | Laboratory testing | Test quotation, method, specimens and report coverage | Landed if required for this order |
| 7 | Final inspection | Inspection quotation and report | Landed cost and cash |
| 8 | Export/origin handling | Forwarder quote showing inclusions | Include only if outside the garment quote |
| 9 | Main freight | Forwarder or seller quote, route and validity | Landed cost and cash |
| 10 | Cargo insurance | Policy or freight quote | Landed if purchased for this order |
| 11 | Destination terminal/handling | Destination quotation | Landed if not already included |
| 12 | Customs broker and entry fees | Broker schedule | Landed cost and cash |
| 13 | Import duty and non-recoverable levies | Classification, customs value and current official rate | Landed cost and cash |
| 14 | Import VAT/GST or sales tax | Customs/tax calculation | Cash; separate until recoverability is confirmed |
| 15 | Last-mile delivery to the defined endpoint | Carrier/3PL quote | Landed if that endpoint is in your definition |
| 16 | Shortage, defect, damage or supplier credit | Receiving count, inspection and credit note | Adjust cost and sellable-unit denominator |
Add a note beside every line that says included, excluded, estimated, quoted or actual. If two vendors use different trade terms or destinations, normalise both quotations to the same endpoint before comparing them.
Use sellable units, not automatically ordered units
Dividing by the purchase-order quantity can make a weak shipment look artificially cheap. Count units at receipt and record what can actually be sold under your agreed quality standard.
| Receiving result | Units | Treatment in the denominator |
|---|---|---|
| Ordered | 150 | Starting reference only |
| Received and saleable | 145 | Include |
| Missing | 2 | Exclude; record any confirmed credit separately |
| Damaged beyond sale | 1 | Exclude unless recovered through a claim |
| Quality hold or rework | 2 | Exclude until released; record rework cost if applicable |
This does not decide whether a supplier owes a replacement or credit. That depends on the approved sample, specification, inspection agreement, acceptance criteria and contract. Use the AQL activewear inspection guide to define the quality decision before shipment rather than inventing it after receipt.
A transparent hypothetical example
The following is arithmetic only. It is not a Linked Sourcing quotation, customer result, market average or price promise.
| Example input | Amount (USD) |
|---|---|
| 150 garments × $10 hypothetical quoted unit price | $1,500 |
| Allocated sample/development | $250 |
| Branding setup and components consumed | $180 |
| Final inspection | $120 |
| Origin, freight, insurance, destination handling and delivery | $470 |
| Import duty and non-recoverable border charges | $180 |
| Landed order cost | $2,700 |
| Potentially recoverable import tax, tracked separately | $320 |
| Illustrative cash required | $3,020 |
If 145 units are received saleable, the landed unit cost is $2,700 ÷ 145 = $18.62. Dividing by the 150 ordered units would show $18.00 and hide the effect of five non-saleable or missing units. If an approved credit is later received, reduce the relevant cost only when the credit is confirmed and document the revision.
Ready Styles: calculate the selected variants first
Ready Styles use an existing standard product selected from the current private Excel catalogue. They start from 50 pieces per style, with at least 15 pieces in every selected color-size combination.
Ready Style mathematical minimum = max(50, selected color-size combinations × 15)
One color across five sizes therefore starts mathematically from 75 pieces, not 50. Two colors across five sizes create ten selected combinations and start from 150 pieces. These are MOQ calculations only; current style, color, size, price and availability are reconfirmed in the private quotation sheet.
For a first Ready Styles cost model:
- Choose the actual style numbers before asking for final freight.
- Record the exact color-size quantities using the size-ratio and colorway worksheet.
- Confirm whether logo, label, hangtag and packaging costs are inside or outside the garment price.
- Separate component setup, minimum purchase and surplus from the garment MOQ.
- Requote logistics after the final carton count, weight, dimensions and destination are known.
Ready Styles reduce product-development work; they do not eliminate freight, import, inspection or branding economics. Request the current private Excel catalogue and stock quotation sheet from Jerry rather than relying on an old public price.
Full Custom: allocate development without hiding it
Full Custom Manufacturing starts from 200 pieces per color and style. A program with two styles in two custom colors starts mathematically from four color-style pairs, or 800 garments, before any higher material, trim or construction minimum is considered.
Full Custom starting quantity = total ordered color-style pairs × 200
A custom order may add pattern work, samples, laboratory tests, custom dyeing, print or mold setup, special trims, labels and packaging. Ask three questions for every fixed charge:
- Is this cost consumed entirely by the first order?
- Does it create an asset or usable component balance for later orders?
- Will the supplier credit or waive any amount after bulk production, and is that written down?
Do not bury every reusable label, mold or packaging unit inside the first order merely because it was paid first. Track what the first order consumes and keep the controlled surplus visible. The labels, logos and packaging guide explains how component MOQ can differ from garment MOQ.
Start a Full Custom enquiry with the product type, quantity per color and style, target market, required changes and any tech pack, reference image or sample you already have.
| First-order cost question | Ready Styles | Full Custom |
|---|---|---|
| Product starting point | Existing standard product selected privately | New or materially changed specification |
| Garment MOQ basis | 50 pieces per style plus 15 per selected color-size combination | 200 pieces per color and style |
| Product-development allocation | Normally limited because the standard product already exists | Samples, pattern/engineering, tests and custom setup may apply |
| Component surplus risk | Logo, label, hangtag or packaging suppliers may exceed garment quantity | Custom fabric, trim, mold, print, label or packaging minimums may apply |
| What still needs a live quote | Selected style availability, branding, cartons, freight, duty and destination | Reviewed specification, development route, materials, branding, cartons, freight, duty and destination |
Incoterms define the quotation boundary, not the whole spreadsheet
The ICC Incoterms® 2020 rules allocate cost, risk and obligations between seller and buyer. They do not set the product price, payment terms, title transfer, tax recovery or your selling margin. Always record the three-letter rule, named place or port and “Incoterms® 2020” in the quotation and contract.
| Quotation basis | Common budgeting action | Frequent mistake |
|---|---|---|
| EXW named place | Add collection, export handling, freight, import and delivery outside the quote | Assuming export clearance is automatically included |
| FOB named port | Add main carriage, insurance as chosen, destination, import and delivery outside the quote | Calling the FOB unit price “landed” |
| CIF named destination port | Check insurance scope, then add import clearance, duty, destination charges and onward delivery as applicable | Assuming CIF means door-delivered or duty-paid |
| DAP named place | Confirm unloading, import clearance, duty/tax and local charges outside the seller scope | Assuming delivery at place includes import duty |
| DDP named place | Ask the seller to itemise inclusions and remaining exclusions; avoid adding bundled lines twice | Treating one all-in number as transparent without confirming importer and tax treatment |
The point where risk transfers is not always the point where the seller stops paying a particular cost. Use the exact rule instead of relying on a one-line abbreviation. For a focused comparison, read DDP, DAP or FOB for activewear.
Customs value, duty and import tax need separate checks
Do not apply a headline tariff percentage directly to a random subtotal. A usable estimate requires:
- the destination market;
- the product description and classification;
- country of origin;
- customs value under the destination’s rules;
- current ordinary and additional duties or trade measures;
- the import-tax base and rate;
- importer status and any available tax recovery.
The WTO explains that ad valorem duty uses the customs value, while other duties can be specific or mixed. For market-level checking, the European Commission says Access2Markets provides EU tariffs, origin rules, taxes, procedures and product requirements. EU guidance also explains that the import-VAT taxable amount can include customs value, duties and incidental expenses, and that eligible taxable businesses may be able to deduct import VAT as input VAT.
Those EU examples show why duty, VAT and cash cannot be one generic percentage. Other destinations use their own classification, valuation and tax rules. Use the current official tariff tool for the destination and ask the broker to record the classification and calculation basis—not merely the amount due.
Do not put every launch expense into manufacturing landed cost
Landed unit cost is only one layer of commercial viability. Keep the following visible but outside manufacturing landed cost unless your accounting policy and decision purpose explicitly require a different treatment:
- creator seeding and influencer samples;
- TikTok or Instagram content production;
- paid social and affiliate commission;
- marketplace, payment and currency-conversion fees;
- 3PL storage, pick-and-pack and customer delivery;
- returns, exchanges and markdowns;
- customer service, photography and website costs.
The distinction matters because markup and margin are not the same:
Markup on landed cost = (net selling price − landed unit cost) ÷ landed unit cost
Gross margin before other variable costs = (net selling price − landed unit cost) ÷ net selling price
Then subtract the channel and fulfilment costs that actually apply. Do not choose a retail price from landed cost alone and assume the remainder is profit.
Use TikTok and Instagram as signals, not purchase orders
TikTok and Instagram can help decide what deserves a small test, but they do not remove inventory risk. TikTok’s official Creative Center says its Trends tool can show hashtag trendlines, related videos, audience insights and regional popularity. Instagram says Insights reports reach, interactions and audience trends for professional accounts.
Use those signals to write a hypothesis such as “test this feature with this audience in this region.” Then seek stronger evidence: qualified enquiries, waitlists, deposits, preorders, comparable sales, size-level history and return reasons. A view, save or trending hashtag is not a guaranteed sale, and one platform’s audience does not prove the size ratio for a production order.
Creator samples and paid media belong in the launch-cash plan. They should not be disguised inside the factory landed-unit number. This separation lets you compare product economics while still seeing the total money required to test demand.
The eight checks before you approve the purchase order
- Same specification: every supplier priced the same fabric, construction, branding, packaging and quality requirements.
- Same quantity basis: style, color and size breakdowns comply with the relevant MOQ.
- Same quotation boundary: trade term, named place, currency and validity date are written.
- No double counting: bundled freight, duty, clearance or packaging is not added again.
- Customs basis recorded: destination, classification, origin, customs value and current measures are documented.
- Tax separated: potentially recoverable VAT/GST is not silently treated as permanent product cost.
- Sellable denominator tested: shortages, inspection holds, damage and credits have a written treatment.
- Three scenarios prepared: base, upside and downside models change freight, exchange rate, duty uncertainty and sellable yield without pretending one forecast is certain.
Once the cost model is accepted, transfer only the agreed commercial lines and supporting-document references into the activewear purchase order checklist. The PO should authorize the order; it should not become a second, conflicting tech pack or a hidden landed-cost spreadsheet.
For a sweat set, calculate top and bottom as separate style/color lines and add pair-specific shade, wash, labeling, SKU, bundle and packaging work. The matching sweat set manufacturing guide prevents a two-style custom program from being budgeted as “200 complete sets” without evidence.
What to send for a comparable landed-cost discussion
Send Jerry:
- Ready Style numbers, or the Full Custom tech pack/reference;
- quantity by style, color and size;
- logo, label, hangtag and packaging requirements;
- destination country, postcode and delivery type;
- requested trade term, if known;
- target delivery window and preferred freight mode;
- inspection or testing requirements;
- the cost lines you want itemised.
For Ready Styles, first request the private Excel catalogue and current quotation. For Full Custom, send your development direction. If you are not sure which route fits, use the shorter activewear manufacturer quotation checklist and ask Jerry to separate the factory quote from the landed-cost assumptions.
