Every other calculator on this site goes forwards: you have a quote, and it tells you what the goods cost you. This one goes backwards — it is the reverse cost calculator, or target costing in the language of a finance department. You give it a price you can actually sell at, and it returns the highest FOB a factory can quote before the deal stops making money.
| Step | Per unit | Share |
|---|
| Component | Amount | Per unit |
|---|
Every row is the same shipment re-landed at a different factory price. The fourth column is the margin you actually keep. The fifth is the one most sellers quote to themselves — and the distance between the two is the difference between a deal that pays and one that only appears to.
| Factory quote vs your maximum | FOB / unit | Landed / unit | Margin on landed | Margin if divided by FOB | Retail price needed |
|---|
"Retail price needed" is the shelf price that restores your target margin at that factory quote, holding the rest of the chain constant. It is usually an easier lever than a discount.
Run the default scenario on this page and the answer looks wrong at first glance. A $29.99 retail product supports a maximum FOB of $7.33 — 24.4% of the shelf price. The other 76% is not waste. It is three margins, a freight bill, an import duty and a broker, in that order of size.
| Step | Per unit | % of retail |
|---|---|---|
| Retail price | $29.99 | 100.0% |
| Less retailer margin (40% of retail) | −$12.00 | −40.0% |
| Your selling price to the buyer | $17.99 | 60.0% |
| Less your margin (35%) and selling costs (4%) | −$7.02 | −23.4% |
| Maximum landed cost | $10.98 | 36.6% |
| Of which freight, duty, fees and delivery | $3.65 | 12.2% |
| Left for the goods at FOB | $7.33 | 24.4% |
Two things follow. First, the hardest negotiation in the chain is not with the factory — it is with whoever sets the retailer margin, because two points there is worth more than a 10% factory discount. Second, before a single unit of product is bought, $3.42 per unit is already committed to freight, statutory fees and delivery. That number does not shrink when you negotiate harder on price. It shrinks when you ship more units per container.
At the maximum FOB, the headline table on this page says your margin is 35%. Divide by FOB instead of landed cost and the same deal reads 59.3%. That gap is not a rounding difference — it is the single most common error in import pricing, and it is how a buyer ends up signing a purchase order that loses money.
The reason is that FOB is not what the goods cost you. Landed cost is. Every percentage that sits between them — duty, fees, freight — is a cost you pay but never see in the factory invoice. The margin calculator enforces the same rule; this page enforces it in the opposite direction.
In a market where import VAT is recoverable — Germany, the UK, the UAE, most of the EU — the 19–20% charged at the border is a cash-flow item, not a cost. Tick the reclaim box and the maximum FOB on the default scenarios rises by roughly a third. That is not a trick: it is the difference between an importer who treats VAT as a cost and one who treats it as working capital.
Where it is not recoverable — an end consumer buying a personal import, or a business not registered for VAT — it lands in the cost base and the factory price has to absorb it. The checkbox exists because the same shipment is a different business depending on the answer.
The obvious approach is to take the ceiling, subtract freight, subtract the fees, and what is left is the factory price. It is wrong, because duty, the MPF and the CIF-based fees are all calculated on the FOB you are trying to find. Subtracting them requires knowing the answer first.
The US is the cleanest example. Merchandise Processing Fee is 0.3464% of FOB with a floor of $33.58. At the maximum FOB this scenario supports, the percentage would come to $25.39 — so the floor applies instead. Below the floor the fee is constant; above it the fee scales. A formula that assumes one behaviour gets the other wrong, and the error lands directly in the factory price you thought you could pay.
So this page solves the equation iteratively instead — it narrows the answer until re-running the full landed-cost calculation on it returns the ceiling to the cent, then shows you that verification in the table above. Every number on this page comes out of the same engine that powers the landed cost calculator, so the two can never disagree.
It is the largest FOB value whose landed cost still fits under your margin ceiling. This page computes the ceiling from your selling price and target margin, then solves backwards for the FOB. On the default scenario a $29.99 shelf price with a 40% retailer margin and a 35% margin of your own supports a maximum FOB of $7.33 per unit.
Because margins multiply rather than add. A 40% retailer margin leaves 60% of the shelf price; your own 35% margin and 4% selling costs leave 36.6% of that, so the landed cost ceiling is a little over a third of retail. Freight, duty and fees then take another third of the ceiling, and what remains is the factory price. Two points of retailer margin is worth more than a 10% factory discount.
Yes, and that is the part most reverse calculators get wrong. Duty, the US Merchandise Processing Fee and any CIF-based fee are all calculated on the FOB being solved, so they cannot simply be subtracted from the ceiling. The page iterates until the full landed-cost calculation returns the ceiling exactly, then shows the verified breakdown.
The page says so instead of returning a near-zero factory price. When freight, statutory fees and delivery alone exceed the landed ceiling there is no FOB that makes the deal work — the order is too small, the market is too expensive, or a margin in the chain has to move. The shortfall is shown per unit.
Only if you cannot reclaim it. In the EU, the UK and most VAT jurisdictions the import VAT is recovered on your return, so it is working capital rather than cost — tick the reclaim box and the maximum FOB rises by roughly a third on a typical European scenario. If you are not VAT-registered, or the goods are a personal import, it stays in the cost base.
Yes. Switch the first control to "My price to the buyer" and the retailer margin step is skipped, so the chain runs from your selling price straight to the margin and landed ceiling. This is the mode to use if you sell to a distributor or on a marketplace where you already know the price you will achieve.
The calculator gives you the answer. These guides give you the reasoning, so you can tell when the answer is wrong.
Working back from a retail price to the maximum FOB you can pay, why subtraction fails on capped fees, and what the answer means in a negotiation.
Read the guide → Pricing · 6 minMargin and markup from the same sale, why the cost input has to be landed cost, and how to find the break-even volume that covers fixed costs.
Read the guide →