Landed Cost
Total cost to bring a product to your warehouse, including product cost, shipping, and duties.
Total cost to bring a product to your warehouse, including product cost, shipping, and duties.
Why It Matters
Landed cost is your true product cost—what you actually paid to have inventory on your shelf. Using just invoice cost ignores freight, duties, insurance, and handling. Accurate landed cost is essential for pricing, margin analysis, and comparing suppliers.
Practical Example
Scenario
A home goods brand calculates true landed cost for products sourced from Asia.
Calculation
Invoice cost: $12.00. Ocean freight: $1.50. Customs duty (8%): $0.96. Broker fee: $0.15. Last-mile: $0.40. Handling: $0.25. Landed cost: $15.26Result
True cost is 27% higher than invoice price. Selling at $45 with $12 'cost' looks like 73% margin, but actual margin is 66%—$3,000/month difference in profit understanding.
Pro Tips
- 1Include ALL costs: product, freight, duties, broker, insurance, inspection, handling
- 2Calculate landed cost by SKU for accurate product-level margin analysis
- 3Update landed cost when freight rates or duties change
- 4Use landed cost for pricing decisions, not invoice cost
Common Mistakes to Avoid
Frequently asked questions
Put it to work
Related Terms
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