Every landed cost build contains an exchange rate, whether it is written there or not. Write it there: the planning rate per cost currency, the date it was set, and the source. When the market rate moves, the variance against the planning rate is then a number your team can read in a minute, per product family, instead of a mood in a meeting. Duty adds a wrinkle worth knowing: customs value is converted at the rate CBP applies for the entry date, so the duty line moves with the currency too, and a model that flexes the goods cost but not the duty understates the swing.
Group products by cost currency before doing anything clever. A catalogue bought in euros, renminbi, and pounds has three exposures wearing one logo, and a blended company margin can hide one currency's products losing money behind another's holding up. Per currency margin reporting is the minimum viable honesty here.
Pick a band, three to five percent against the planning rate is a common working range, at which a cost review is automatic: rebuild the landed cost at the new rate, identify the SKUs whose contribution falls below your floor, and put them on the price review list with a date. The band's exact width matters less than its existence and its enforcement. A trigger that fires and produces a meeting that produces no decisions is a decoration. The rule should name the decision owner and the deadline the way the seasonal calendar names its markdown date.
Do not reprice on a one day spike. Use a short moving average against the band to filter noise, because chasing daily moves trains customers to wait out your prices and trains your team to ignore the rule. Repricing is a considered act with a cost in trust. Spend it on moves that lasted.
Forward contracts and currency accounts exist, and for an importer with steady, predictable foreign payables they can convert an unknown into a known at a modest cost. They also carry minimums, margin requirements, and the risk of hedging a purchase order that later shrinks. The honest test is volume and regularity: a business paying a supplier monthly in one currency can hedge a rolling share of expected payables sensibly. A business with sporadic orders is usually better served by the trigger band, shorter price validity on quotes, and supplier terms that share the movement.
Ask suppliers for the option that costs nothing first: pricing in dollars for a defined period, a shared movement clause beyond an agreed band, or shorter validity you can plan around. A supplier clause that splits a move beyond five percent is worth more than a forecast, because it pays in the event rather than predicting it.
When the review lands on a price rise, say what moved, in one factual sentence, with notice matched to your channel's norms. Wholesale customers plan seasons and forgive a currency rise explained early. They do not forgive a silent rise discovered on an invoice. Keep the increase mapped to the cost lines that actually moved, goods and duty at the new rate, not a general percentage applied to lines that never changed. Precision here is not pedantry. It is the difference between a partner believing the next letter and discounting it.
Each date has a job: the planning rate builds the price, the payment rate is your cash reality, and the entry date rate sets the customs value and duty. Track the planning rate in the model and report variance against it, so the swing is visible instead of absorbed silently.
Wide enough to ignore daily noise and narrow enough to fire before a margin is gone: three to five percent against the planning rate, read on a short moving average, is a workable start for most importers. Set it from your own margin thickness, not from habit.
Only where payables are regular and predictable enough to match the hedge to real orders. Otherwise the trigger band rule, shorter quote validity, and supplier movement sharing clauses deliver most of the protection without the contract risk.
Yes. The customs value is stated in dollars at the conversion applied for the entry, so a currency move changes the duty paid on the same foreign currency price. Models that flex only the goods cost understate the true swing.