What landed cost actually includes.
What one unit has cost you by the time it is sitting in your warehouse ready to sell.
Not what the factory charged. Everything it took to get it there.
The short answer
Landed cost is the supplier invoice plus everything it took to get the goods here,
divided by the units that actually travelled. It stops at your warehouse door: what the
marketplace takes, what the card processor takes and what returns cost you all come
afterwards, and they belong in their own stack.
Six things between the factory and the shelf
Only the first one arrives as a price per unit. The rest arrive as bills for a whole
shipment.
- What the factory charged you: the unit price, plus tooling, sampling and setup
charges amortised across the units they produced.
- Freight, all the way to your door: origin handling, the ocean or air leg,
destination charges and the inland run. Billed per shipment, not per unit.
- Duty and tariffs: assessed on the customs value at the rate for the product's
classification and country of origin, not as a flat percentage of the invoice.
- Customs brokerage and port charges: entry filing, the broker, terminal handling.
- Insurance on the goods in transit.
- Receiving, prep and the first put-away: unloading, inspection, labelling and
anything a fulfilment centre charges to take the shipment in.
One shipment, worked out
A thousand units. Supplier invoice
,100, ocean freight and origin charges ,180,
duty
90, customs brokerage and port charges
50, marine insurance $40, inland
delivery and receiving 20. Total $4,880, or $4.88 a unit.
The number on the invoice was
.10. The number worth pricing against is $4.88. Costing
against the invoice alone understates this unit by 36% before a single selling cost has
been taken off it. Order 2,000 units instead and the shipment charges barely move, so
they land on twice as many units: the biggest components of landed cost scale with the
shipment, not with the invoice.
What does not belong in it
- Import VAT or GST you can reclaim. It moves through your cash, not your cost.
- Marketplace commission, card fees and fulfilment. Those start after the unit has
landed, and are a separate stack.
- Storage while it waits to sell. That accrues over time rather than arriving with
the shipment.
- Today's exchange rate. Use the rate you actually paid at.