Landed Cost
Definition
The full cost of getting a unit into your warehouse and ready to sell: the supplier price plus freight, duties, tariffs, customs brokerage and inbound fees.
Want a deeper explanation?
Formula
Landed Cost per Unit = (Product Cost + Freight + Duties + Brokerage + Other Inbound Fees) ÷ Units ReceivedLanded cost is the real price of a unit sitting on your shelf. If you price and calculate margin off the factory invoice alone, every product looks more profitable than it is, and the gap grows when freight rates or tariffs jump.
Getting it right means attaching freight, duty and brokerage bills to the purchase order they belong to, then spreading them across the units received. Watch for: inbound freight and duties sitting in a general expense account instead of flowing into inventory and COGS.
Example
1,000 units at $8 each, plus $1,200 freight, $900 duties and $150 brokerage, gives a landed cost of $10.25 per unit, not $8.