What goes into landed cost?
Everything you pay to get stock from the supplier to a sellable location:
- Product cost: the price on the purchase order.
- Freight: ocean, air or truck, plus fuel surcharges.
- Duties and tariffs: charged on import.
- Brokerage and port fees: customs clearance, drayage, terminal handling.
- Insurance: cargo insurance for the shipment.
- Inbound handling: 3PL receiving or prep fees, if you pay them per shipment.
How is landed cost allocated to units?
Shipment-level costs have to be split across the units on that shipment. The common methods are by value (a unit worth twice as much carries twice the freight), by quantity, by weight or by volume. Value is the usual default for mixed shipments; weight or volume fits freight-heavy goods better.
What does an example look like?
A shipment of 1,000 units at $8.00 each costs $8,000 at the supplier. Freight is $1,200, duties $640 and brokerage $160. The extra $2,000 spread across 1,000 units adds $2.00 a unit, so the landed cost is $10.00, not $8.00. Price or report margin on $8.00 and every sale looks 20% better than it is.
Why does it matter for a product brand?
Gross margin, inventory valuation and reorder decisions all depend on unit cost. When landed cost lives in a spreadsheet, the books carry the PO price and month-end turns into adjustments. Recording it at receiving keeps valuation and COGS right from the day stock arrives.
How does SuppliFlex handle landed cost?
In SuppliFlex, landed cost is captured when a purchase order is received. Freight, duties and fees are added to the receipt and allocated to the units, and the inventory sub-ledger syncs to QuickBooks Online or Xero as the general ledger. See purchasing in SuppliFlex for the full receiving flow.