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Cost comparison

Calculating China sourcing costs: look beyond the goods price.

Start with a common quotation basis: the Incoterms® rule and edition, named place, currency, quantity and each party's responsibilities. Without these, two prices are not truly comparable.

Align the comparison basis

State the Incoterms® rule, edition and named place or point, for example FCA [location] Incoterms® 2020, along with currency, quantity and validity. Incoterms® allocate delivery costs and risks; they do not automatically determine quality, payment or transfer of ownership.

Break costs into clear groups

Break costs into clear groups
GroupExamples of items to confirm
GoodsPrice for the specified product, quantity and payment terms.
PreparationAgreed samples, packaging, inspection and testing.
Goods in transitOrigin transport, export procedures, freight and insurance according to responsibilities.
ImportApplicable duties and taxes, customs procedures and document fees.
HandoverPort charges, storage, local transport and unloading where needed.
CoordinationAgreed Arclena fees and services from other professionals or providers.
UncertaintyUnconfirmed costs, exchange-rate changes, specification revisions or schedule changes.

Customs value is not the total sourcing budget

Indonesian Customs uses customs value as the basis for import duty calculation and, when the conditions for transaction value are met, applies a cost, insurance and freight (CIF) basis. A total sourcing budget is broader and may also include inspections, storage, local delivery, handling, financing and delay costs.

Do not apply one tax percentage to every product. Classification, value, documents and transaction requirements must be checked by the party handling imports. This guide does not set tariff rates or calculate the obligations for a particular shipment.

Keep uncertain costs visible

Use three statuses: quoted, estimated with assumptions, and unconfirmed. Record the source and date. An unconfirmed cost is neither zero nor part of a final price.

If scenarios are needed, label assumptions clearly. An internal contingency allowance must not be presented as an official levy or a confirmed invoice.

Five checks before accepting a quotation

  • Ensure no cost is counted twice or left without a responsible party.
  • Check exclusions and who must approve changes.
  • Agree validity, currency, payment and handling of non-conformities.
  • Request service fees separately so comparisons remain meaningful.
  • Ensure HS classification and import obligations are checked before shipment.

Sources

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