Pricing duties at checkout: DDP or DAP

Every international parcel answers one question, whether you decide it or not: who pays the import duties and taxes, and when? There are two common answers. Under DDP (delivered duty paid), you collect duties and taxes at checkout and settle them with customs. Under DAP (delivered at place), the shopper pays them on arrival, usually to the carrier.

Both are legitimate. They lead to very different shopper experiences.

Figures in this post are illustrative placeholders, not measured results.

What the shopper sees

Under DAP, the shopper pays the item price and shipping at checkout. Days later, a carrier asks for an additional amount before handing over the parcel. That amount often includes duty, import VAT or GST, and a carrier handling fee. Many shoppers do not expect it.

Under DDP, the shopper sees the full landed cost at checkout: item, shipping, duty and tax. Nothing more is due on delivery.

Where DAP costs you

DAP looks cheaper on paper because you never touch the duty. In practice it moves cost elsewhere:

• Refused parcels. Some shoppers decline to pay on delivery. The parcel returns to you, and you pay return shipping on an order that earned nothing. In our illustrative dataset, refusal rates for DAP orders ran at 6–11% in markets with high VAT, against under 1% for DDP orders.
• Support contacts. "Why am I being charged again?" is a common ticket. Each one costs time.
• Chargebacks. Shoppers who pay a surprise fee sometimes dispute the original card payment.
• Reputation. A surprise charge is remembered longer than a slightly higher price.

Where DDP costs you

DDP is not free either:

• You carry classification risk. If you under-calculate duty, you pay the difference. Accurate HS codes matter.
• Higher displayed price. The checkout total is higher, which can lower conversion at the payment step if shoppers compare against a DAP competitor's headline price.
• Registration. Some markets require you to register for import VAT or use a registered intermediary to collect it at sale.

A worked example

A shopper in Germany orders a wool jacket priced at €180 with €15 shipping. All figures illustrative.

The total is close in both cases. What changes is when the shopper learns it.

How to choose

Use DDP when:

• Your average order value is high enough that duty and tax are a noticeable share of it.
• You sell into markets with high import VAT, such as most of the EU and the United Kingdom.
• Your returns process is expensive.

DAP can still make sense when:

• Most orders fall below the market's duty threshold, so little or nothing is due.
• You sell low-value items where the handling fee would outweigh the duty.
• You are testing a market and do not yet want to register there.

Many sellers run a mix: DDP in their top markets, DAP elsewhere, reviewed every quarter.

What you need for DDP

1. HS codes for every product. A six-digit code is the minimum. Some markets need eight or ten.
2. Country of origin for each product, because preferential trade agreements can reduce duty to zero.
3. A calculation at checkout that uses the shopper's destination, the items, shipping cost and current rates.
4. A way to remit the collected amounts to customs, usually through your carrier or a broker.

Landed Cost handles the third step through one API call and returns a line-by-line breakdown you can show at checkout. Trade Compliance helps with classification and restricted-goods screening. Remittance runs through your existing carrier.

Showing the price

If you choose DDP, say so clearly. A short line under the total, such as "Includes import duties and taxes. Nothing more to pay on delivery", answers the question before the shopper asks it. Show the duty and tax as separate lines so the shopper can see what they are paying for.

Further reading

Our landed cost playbook covers classification, de minimis thresholds and returns of duty in more depth. You can estimate landed cost for a sample order with the pricing calculator.