# How to build a duty budget for a cross-border promo | LandedWatch

Source: https://landedwatch.com/blog/duty-budget-cross-border-promo/

**Short answer:** Model the promo as a separate duty scenario: discounted prices, the product mix you expect to sell, and the markets you are pushing into. Duty is computed per order on real values, so a flat margin assumption from your full-price business will be wrong. Build the budget from the SKU level up, then add a buffer for volume-driven surprises.

## Why promos break normal duty assumptions

* Discounts change the customs value of the goods, which changes the duty per order. Your standard duty-per-order figure no longer applies.
* Promo mixes skew toward hero SKUs and bundles, and different SKUs carry different rates. The blended rate of a sale week is not the blended rate of a normal week.
* New markets you activate for the promo may have rate schedules you have never modeled. A first-time push into the UK or a new EU country is a duty unknown.

## Build the budget SKU by SKU

* List the SKUs you expect to sell during the promo with their discounted prices and forecasted quantities.
* Apply each SKU's duty rate and VAT treatment per destination market to get the per-order duty cost.
* Add the per-order carrier and disbursement fees your contract charges on the promo lanes, not the annual average.
* Multiply by forecasted order counts per market and sum it. That is your duty budget line for the promo.
* Sanity-check the result against margin per order. If the duty budget turns any hero SKU negative at the promo price, rethink the discount depth on that SKU.

## Add the buffers that promos always need

* Volume buffer: customs delays scale with volume, and delayed parcels generate more support cost. Budget 5 to 10 percent over the computed duty for operational friction.
* Returns buffer: promo orders return at higher rates, and cross-border returns mean duty-recovery work. Scale a returns allowance to the promo order count.
* Rate-change buffer: if a rule change lands mid-promo, your estimates shift. Keep a contingency line rather than repricing the whole sale.

## Watch it while the promo runs

* Track actual duty per order daily against the budget. Drift in the first 48 hours usually means the product mix or market mix differs from the forecast.
* If a SKU is selling far above forecast, re-run its duty math at the real volume. Concentration risk is the quiet budget killer.
* After the promo, reconcile: what did customs and carriers actually bill versus the budget. The variance is your lesson for the next one.

## Questions buyers ask

## Do discounted prices lower the duty owed on an order?

Customs value is generally based on the transaction value, so a genuine discount usually reduces the dutiable base. The rules differ by country and by how the discount is structured, so confirm with your broker for each market.

## How do returns during a promo affect the duty budget?

Higher promo volume usually means higher return volume, and cross-border returns carry duty-recovery work on top of shipping costs. Budget a returns allowance scaled to the promo's expected order count.

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