When comparing supplier offers, the biggest temptation is to immediately choose the lowest figure. In reality, the unit price listed in the offer is just the tip of the iceberg. The actual cost you bear until the goods are ready for use—called landed cost—is often much higher, and what appears to be the "cheapest" offer can actually be the most expensive.
What is landed cost?
Landed cost is the total cost of a product until it arrives and is ready for use at your location—not just the purchase price. It combines the unit price with all costs incurred throughout the product's journey from the supplier to your warehouse.
Commonly overlooked components
Unit price — the figure visible in the offer, and usually the only one compared.
VAT & taxes — 11% VAT and other levies often forgotten in comparisons.
Shipping & insurance costs — the farther the location and heavier the goods, the larger their proportion.
Duties & handling — for imported goods: import duties, loading/unloading, and warehousing costs.
Hidden costs — long lead times (waiting costs), reject/QC rates, and weak warranties leading to future repair costs.
Why "cheapest" can be deceiving
Imagine two offers. Supplier A provides a lower unit price, but their location is far, their warranty is limited, and their lead time is long. Supplier B is slightly more expensive per unit, but is nearby, reliable, and ready to ship quickly. On paper, Supplier A wins. However, after summing shipping costs, reject risks, and waiting costs, Supplier B is often cheaper overall—and safer for your project schedule.
How to compare correctly
Ask each supplier to explicitly detail their offer: whether the price includes tax or not, who bears the shipping costs, and what the lead time is. Then compare the final figure to your warehouse, not just the unit price. A uniform Request for Quotation (RFQ) template makes this comparison quick and error-free.
Cheapest on paper ≠ most economical
Strong procurement doesn't chase the lowest unit price, but the <em>lowest total cost of ownership</em>. Once you're accustomed to comparing landed costs, decisions become more accurate and margins are better protected.
Want a complete calculation framework? Download the free B2B Procurement Guide 2026 from ID Industri—including ways to cut costs by 20–30% and ready-to-use RFQ templates for fair offer comparison.