Profit margin on imported goods: the arithmetic that decides

Working out the profit margin on imported goods: landed cost per unit, the break even quantity, exchange rate risk, and the discount you will end up giving.

Profit margin on imported goods is not the difference between the 1688 price and the Lagos price, and believing that it is has cost more Nigerian importers more money than any supplier scam. The real number arrives after nine costs, most of which happen after the goods leave China, and one of which, the exchange rate, can move against you while you are waiting. This page is the arithmetic, done properly, with the two numbers that actually matter.

Start from the selling price, not the buying price #

Everybody does this backwards. They find a product at a good price in China, get excited, and work forwards. Then the duty arrives.

Do it the other way:

1. What does this actually sell for in your market, today, to the customer you will really have? Not the best price you have seen. The normal one.
2. What margin do you need to make this worth doing, after your own costs of selling?
3. That gives you the maximum landed cost per unit you can pay.
4. Work back through duty, freight and everything else to the maximum price in China.
5. Now go to 1688 and see whether anybody sells it at that price.

If nobody does, you have saved yourself a shipment. That is a good outcome and it took an afternoon.

The nine costs in a landed cost #

Per unit, not per carton:

1. The goods themselves
2. Chinese inland freight to the consolidator
3. Consolidation and warehouse handling
4. International freight, sea or air
5. Insurance
6. Customs duty, which depends on the HS code
7. VAT and statutory levies on top of duty
8. Port charges, terminal handling and the clearing agent
9. Haulage from the port to you

Our landed cost page works through a real example and our duty page handles the government side. Add certification where it applies: a SONCAP product certificate on the unregistered route is 500 dollars plus 350 dollars for the SONCAP certificate, spread across whatever quantity you ship.

Divide the total by the number of sellable units. Not the number you ordered. The number you can actually sell, after breakage, defects and the short count.

The two numbers that matter #

Margin per unit is landed cost subtracted from realistic selling price. Note the word realistic. Whatever you plan, you will discount the last third of the stock to clear it, so work out your margin on a blended price: two thirds at your price, one third at the price that moves it.

Break even quantity is the total cost of the shipment divided by the margin per unit. That tells you how many you must sell before any of it is profit, and it is the number that tells you whether the order size is sane.

If you must sell 70 percent of the consignment to break even, the order is too big for what you know about the market. If you break even at 30 percent, you have room to be wrong.

Markup and margin are not the same thing #

A unit landed at 1,000 naira and sold at 1,500 is a 50 percent markup and a 33 percent margin. People quote the first and budget with the second, and the gap is where businesses quietly fail.

Margin is profit divided by selling price. That is the number to use, because that is the one that has to cover rent, transport, your time, the goods that break and the ones that never sell.

The exchange rate, which is a real risk #

You pay a deposit in dollars or yuan. Weeks later you pay the balance. Weeks after that the goods arrive and you pay duty, which is calculated on a naira value. Then you sell in naira, over months.

Every one of those steps is exposed to the rate moving. A naira that weakens between your deposit and your balance raises your cost after you have already committed. Our yuan to naira page explains how the rate works for an importer and our payment page covers the routes.

Two defences: price your goods against the rate you might face rather than the one you got, and do not let the gap between deposit and balance stretch longer than it needs to.

The costs people forget #

• Demurrage and storage if clearing takes longer than the free days. Our Apapa page explains how that happens
• The goods that arrive broken, which is a real percentage on anything fragile
• The short count, because the carton said 100 and held 96
• Returns and warranty, which on electronics is not optional if you want repeat customers
• Your own time, which is a cost even when you do not invoice it
• The capital itself, tied up for the months between paying and selling

Put a number on each. Guessing zero is how a 30 percent margin becomes a 5 percent one.

What is a healthy profit margin on imported goods? #

There is no universal target, and anybody quoting one has not seen your costs. What matters is the relationship between three things: the margin has to cover your costs of selling, the break even quantity has to be reachable with the demand you can prove, and the cash cycle has to be one you can survive.

A thin margin on a fast moving product with repeat demand can be a better business than a fat margin on something that sits for a year. Turnover of stock, not margin per unit, is what pays the rent.

Test the arithmetic before you test the market #

Work the profit margin on imported goods out on paper, with real figures, before you pay any deposit. Get a real freight quotation rather than an estimate, get the HS code and the duty rate from a clearing agent rather than a guess, and price the certification.

Then do it again at a 15 percent worse exchange rate and a 20 percent lower selling price. If it still works, it is a business. If it only works at the best case, it is a bet.

Our capital page covers sizing the order once the arithmetic passes, and our product page covers choosing something that can pass it at all.

First published 20 Sep 2026. Last checked 20 Sep 2026 by The ChinaBridge desk. Something here out of date? Tell us in the comments and we will fix it.