How to Calculate Profit on China Imports: From Landed Cost to Net Margin and ROI

1. The Margin That Does Not Exist

A product quoted at the equivalent of ₹400 at the factory and selling for ₹1,200 on an Indian marketplace looks like a 200% markup. Between those two numbers sit freight, insurance, duty, port and broker charges, inland transport, the GST on the sale, the marketplace's fees, advertising, returns, and the months for which your money is tied up. The real margin is often a fifth of the apparent one, and sometimes negative. The method below puts every cost in its place; the import profit calculator does the arithmetic once you have the inputs.

2. Step One: Landed Cost per Unit

Landed cost is what one unit costs when it is on your warehouse shelf, cleared and ready to sell. The import from China to India guide explains each stage of the journey that adds to it.

1. Goods: the factory price in rupees at the rate you actually paid (the bank's rate, not the one in the news).
2. Freight and insurance to the Indian port, allocated per unit. For LCL and small FCL shipments this allocation is large; the freight charges article lists the lines.
3. Customs duty: BCD, SWS and any anti-dumping duty on the assessable value, as the China import duty article shows. IGST paid at import is excluded from cost if you are GST-registered, because it comes back as credit.
4. Port, broker and inland: destination charges, CFS, customs broker fee, transport to your warehouse.
5. Pre-shipment costs: samples, inspection, certification, allocated over the order.

The landed cost calculator builds this figure from the invoice, the freight and the duty rates.

3. Step Two: The Price You Actually Keep

The price the customer pays includes GST, which you collect for the government. A product sold at ₹1,180 inclusive of 18% GST is ₹1,000 to you. Work every selling figure net of GST; the IGST credit from import offsets the GST you owe on the sale, which is why it is not a cost above. If you sell to a wholesaler, the net price is the wholesaler's price, not the shelf price.

4. Step Three: Selling Costs

• Marketplace fees where you sell online: a referral or commission percentage by category, a fixed closing fee per order, shipping or fulfilment charges, and storage. Read the fee schedule for your category and order value; they differ widely and change.
• Advertising: sponsored listings and social media spend, as a percentage of sales. New products need more than established ones.
• Returns and damage: a percentage of units that come back or are written off. Fragile and sized goods run higher.
• Payment and collection costs for direct and wholesale sales.
• Your own overhead: warehouse, staff, packaging, software, allocated per unit at the volume you will actually sell, not the volume you hope for.

5. Step Four: Net Profit and Margin

Net profit per unit = net selling price − landed cost − selling costs per unit. Net margin = net profit ÷ net selling price. Gross margin (before selling costs) is the figure many importers quote; net margin is the one that pays the bills. A product with a 55% gross margin and 40% in selling costs has a 15% net margin before overhead.

6. Step Five: Working Capital and Return on Investment

Money leaves at different times: a deposit of around 30% at order, the balance before shipment, duty and port charges on arrival, and marketplace payouts arrive days or weeks after each sale. From deposit to the last unit sold is commonly four to eight months. Return on investment compares the total net profit on the batch with the capital you had to put in, and annualises it: a batch that returns 20% on its capital in six months is a 40% annual return if you can repeat it; the same 20% over twelve months is 20%. Faster-selling products with smaller, more frequent orders often beat a higher-margin product that sits in stock, which is the argument for the smaller first order the China sourcing guide recommends.

7. A Worked Example

The apparent 200% markup is a 4.5% margin before overhead, on capital tied up for perhaps six months. Change the shelf price to ₹1,499 and the net profit per unit rises to about ₹300, which is the real decision: can the product sell at that price, in that volume, against the competition? The figures are illustrative; put your own into the profit calculator, and if you want them checked by someone who imports for a living, the China import consultation does exactly this.