What Landed Cost Includes
Landed cost is the cost of getting one drone from the supplier to your Canadian selling location, ready to be sold. Start with the product purchase price, including the unit price and any supplier charges that are part of acquiring the drone. Add inbound freight from the supplier, transport insurance, customs duty, and eligible import charges required to clear and receive the shipment.
Eligible import charges can include necessary customs brokerage, documentation, handling, or port charges when they relate directly to bringing the inventory into Canada. Keep the calculation tied to the shipment and its inventory: a $600 drone with $40 allocated freight, $8 insurance, $30 duty, and $7 eligible import charges has a core landed cost of $685 before tax.
Do not add expenses incurred to sell the drone after it reaches your location. Advertising, Shopify fees, payment processing, pick-and-pack, domestic delivery to the customer, customer service, storage, and sales commissions belong in separate profitability measures. Keep GST/HST and other recoverable tax out of the core landed cost rather than treating tax collected or recoverable as product cost. This keeps the product margin comparable across shipments and selling locations.
Duty and Classification Basics
Tariff classification is the customs code assigned to the imported product. It determines the duty treatment, while country of origin determines whether standard tariff treatment or an applicable preference may apply. Customs value is the value used to calculate duty, usually based on the acceptable value of the goods with required adjustments. The result is a customs calculation: classification and origin establish the treatment, and customs value provides the base.
Do not classify a product from the word “drone” alone. Confirm the product facts first, including its specifications, configuration, function and how it is supplied. A camera drone, racing drone and replacement component may not share the same classification. Also verify manufacturing origin rather than assuming the shipping country is the origin.
The store’s broader landed-cost calculation serves a different purpose. It can combine the supplier cost with allocated freight, insurance, brokerage and duty to show the cost of getting each unit ready for sale. Customs duty answers what must be assessed at import; landed cost answers what the unit costs your business. Use the customs calculation for import paperwork and the broader figure for pricing and margin decisions.
Worked example with sample numbers
This example is illustrative. It uses sample numbers for a drones store selling in Canada. They are made up to show the method, they are not a benchmark, and your own figures will differ.
Formula: Landed unit cost = (supplier cost + freight + duty + fees) / units.
| Line | Shipment | Per unit |
|---|---|---|
| Supplier cost | C$49882.74 | C$77.94 |
| Freight | C$1467.89 | C$2.29 |
| Duty | C$2233.99 | C$3.49 |
| Broker and handling | C$123.50 | C$0.19 |
| Landed cost | C$53708.12 | C$83.92 |
Run the same sum with your own numbers in the free calculator, or browse guides for sellers in Canada and more drones guides.
General information only: tax, duty and import rules change and depend on your situation, so check with an accountant or the official source before acting.
Eligible Shopify stores can see these numbers for their own store through the Founding 10,000 offer.
Keep Tax on Its Own Line
Keep duty, tax and broker charges separate: duty follows classification and origin; clearance or disbursement fees are service costs; GST/HST collected or paid on your behalf is tax, not automatically purchase cost.
Recoverable GST/HST normally stays outside unit cost because registered businesses may claim eligible input tax credits. CRA says most businesses need not register while taxable supplies do not exceed $30,000 over four consecutive calendar quarters. If unrecoverable, accounting policy may include it in cost or track it separately.
Provincial treatment affects tax, not duty. CRA lists GST/HST rates by province: Alberta, British Columbia, Manitoba, Quebec, Saskatchewan and the territories 5% GST; Ontario 13% HST; Nova Scotia 14% HST from April 1, 2025; and New Brunswick, Newfoundland and Labrador and Prince Edward Island 15% HST. For goods delivered across provinces, the delivery province determines the rate; Ontario delivery uses 13% HST (Source: Canada Revenue Agency).
Allocating Freight Across Units
Allocate shipment-level costs consistently, then document the rule. Freight, cargo insurance, brokerage and handling can be assigned by units, weight, volume or product value. The right basis depends on what drives the carrier or service charge. A mixed shipment of 10 drones with $100 in freight gives each unit $10 under a unit basis. That is defensible only when the drones are similar in size and shipping requirements.
For a mixed shipment, calculate each drone’s share of the chosen driver: a drone weighing 2 kg in a 20 kg shipment receives 2 ÷ 20 = 10% of weight-allocated charges. Apply the same percentage to every shipment-level charge unless the invoice identifies a charge for a specific product. Keep the allocation rule and source data with the purchase record.
| Basis | Use when | Act on this measure when |
|---|---|---|
| Units | Drones are similar in size, weight and packaging | Comparing like-for-like models |
| Weight | Freight is billed by actual or billable weight | Packaging and battery weight differ materially |
| Volume | Carrier cost follows dimensional space | Box sizes vary or air freight is dimensional |
| Value | Insurance or value-related fees drive the charge | High-value drones need a larger cost share |
Rules to Confirm Before Importing to Canada
Before pricing, check the exact model, origin and route in the CBSA Customs Tariff for classification, tariff treatment, origin requirements and proof for preferential treatment. Confirm the importer of record, who remains responsible for declarations, valuation, records and duties even if a broker files the entry.
Verify labelling, consumer information, packaging language and product compliance. Check ISED for radio certification, Transport Canada for lithium-battery rules, and the applicable authority for electrical and consumer products. Confirm shipping documents with the carrier or broker. Review CRA GST/HST registration: most businesses remain small suppliers while taxable supplies do not exceed $30,000 over four consecutive calendar quarters (Source: Canada Revenue Agency).
- CRA says goods delivered in another province are charged that province’s rate: Alberta, British Columbia, Manitoba, Quebec, Saskatchewan and the territories 5% GST; Ontario 13% HST; Nova Scotia 14% HST from April 1, 2025; New Brunswick, Newfoundland and Labrador and Prince Edward Island 15% HST (Source: Canada Revenue Agency).
How to Read the Worked Cost Example
Read the calculation top to bottom: start with supplier price per drone, then follow shipment charges allocated per unit. Add non-tax lines for landed unit cost, keeping tax separate. Check unit total multiplied by shipment quantity reconciles to shipment total. Freight, duty, insurance, brokerage and handling affect product economics and margin. Tax primarily affects cash, while accounting treatment depends on registration and recovery position.
Choose the measure matching the decision. Use product cost to compare supplier quotes or model purchase-price changes; landed cost to set prices, calculate gross margin and value inventory ready for sale; tax-inclusive cash required to plan payment and working capital to clear and receive the shipment. That amount can exceed economic cost when tax is recoverable but still leaves your account before recovery. Run alternative quantities or freight assumptions in the product pricing calculator to see which lines move the result.
| Measure | Use it for |
|---|---|
| Product cost | Supplier comparisons and purchase-price scenarios |
| Landed cost | Pricing, gross margin and inventory value |
| Tax-inclusive cash required | Funding the shipment and payment timing |
A useful Canadian drone cost model makes every assumption visible: product value, duty, freight, brokerage and tax should be traceable rather than compressed into one number. Use the landed unit cost to assess gross margin and pricing, the tax lines to plan cash and remittances, and the source documents and current government rules to validate the calculation before importing.
Sources
- GST/HST provincial rates table (Canada Revenue Agency, checked 26 October 2026).
- Charge and collect the tax: which rate to charge (Canada Revenue Agency, checked 26 October 2026).
- When to register for and start charging the GST/HST (Canada Revenue Agency, checked 26 October 2026).
How this page was made: drafted with AI from a brief, then checked by automated rules for arithmetic, sources and duplication. The sample numbers were calculated, not reported.