Profit
What is Landed cost?
The full cost of getting a unit to your warehouse and ready to sell, including the product, freight, duty, insurance and handling. It is the number your margins should be built on, because the factory price alone always understates what the unit cost you.
Why it matters in practice
Landed cost is where a business finds out its margins were never what it thought. Two sellers can buy the identical product at the identical factory price and end up with very different unit costs, because one shipped by sea in a full container and the other airfreighted a partial pallet to catch a season. The pieces to include are the product itself, international freight, customs duty, insurance, port and drayage charges, and the inbound handling to get units received into stock. Work it out per unit, not per shipment, and rebuild it whenever freight rates or order quantities change. If freight per unit doubles on a smaller reorder, the price that used to work no longer does, and you will only see it if freight is charged to the unit rather than filed as a general expense.
Want this working in your favor instead of against you? The Strategy Audit names the gap on your own account, the optimizations, a phased plan, and a potential outcome, delivered free.
Back to the full glossary, every term on one page.