The price on a supplier's invoice is rarely what a product actually costs you. Add freight, duties and handling and the real figure — the landed cost — can be far higher. Price off the invoice alone and you quietly sell at a loss. This guide explains landed cost, how to calculate it, and why it is the number your pricing should start from.
What is landed cost?
Landed cost is the total cost of getting a product to your door and ready to sell — not just the purchase price, but everything spent to bring it in. It is the true cost you should use to set prices and measure margin.
What's included in landed cost
| Component | Examples |
|---|---|
| Product cost | The supplier's price for the goods |
| Shipping / freight | Transport to your location |
| Duties & taxes | Customs duties, import taxes |
| Insurance | Cover on goods in transit |
| Handling & fees | Port, brokerage, packaging, handling |
How to calculate landed cost
For a per-unit figure, total the shipment's costs and divide across the units — usually by quantity, value or weight. For example, $10,000 of goods plus $1,500 freight, $800 duty and $200 handling = $12,500 landed. Across 1,000 units, that is $12.50 each, not the $10 on the invoice.
Why landed cost matters
Your margin and prices are only as accurate as the cost behind them. Using the invoice price instead of landed cost overstates your margin and leads to underpricing — see pricing for profit. It matters most on imported and heavy or bulky goods, where freight and duty are a large share of cost.
Allocating landed cost fairly
When a shipment holds different products, spread shared costs like freight sensibly — by value for mixed goods, or by weight or volume when size drives the freight. Consistent allocation keeps each product's cost, and therefore its margin, honest.
Track landed cost automatically
RushFlow lets you add freight, duty and handling to a purchase and spread it across the items received, so every product carries its true landed cost — and your margins reflect reality.