The short answer: landed cost is the total cost of a product once it has arrived at your door — the purchase price plus freight, insurance, customs duty, taxes, and handling. Pricing off the invoice price alone ignores these extras and quietly eats your margin, especially on imported goods.
What goes into landed cost
- Product price — what the supplier charges.
- Freight & shipping — getting it to you.
- Duty & import taxes — customs charges.
- Insurance — covering the goods in transit.
- Handling & clearing fees — ports, agents, local transport.
Why it matters for pricing
If you price using only the supplier invoice, you understate your cost — so your margin is smaller than you think, and you might even be selling at a loss. Landed cost gives you the real number to price from. See pricing for profit.
A worked example
Say you import goods invoiced at 100,000. Freight is 8,000, duty 12,000, and clearing/handling 5,000. Your landed cost is 125,000 — 25% above the invoice. If you’d priced for a 30% margin off the 100,000 invoice, your real margin would be far thinner once the true cost is counted.
Spreading costs across items
Freight and duty usually cover a whole shipment of many products. Allocate them across the items — by value, weight or quantity — so each product carries a fair share of the landed cost. Doing this by hand is tedious; a system that distributes shipment costs across lines makes per-item cost accurate.
Get true cost automatically
RushFlow lets you add freight, duty and other charges to a purchase and spread them across the items, so every product’s cost — and your profit — reflects the real landed cost. See the live demo.