Landed cost is what one sellable unit cost you after it was bought, shipped, cleared, and received.
It is not the factory invoice, and it is not freight alone.
It is the full inbound stack that got the unit onto a shelf or into FBA.
If you import, this is the number you price from, compare factories with, and use to approve the next PO.
The supplier charge is one line inside it.
Stay here for the term and why the gap matters, not another formula walkthrough.
- Method, $10 invoice that lands at $14.10: how to calculate landed cost
- Identities on a card: landed cost formula
- The divisor (sellable units, not the PO qty): landed cost per unit
- Importer policy before you buy: how to calculate landed cost for imported products
- Cash and stages from factory floor to receiving: true cost, factory to warehouse
- Accounting boundary: landed cost vs COGS
The Definition
A practical definition:
The fully loaded inbound cost of a product once it has been purchased, shipped, imported, and delivered into available inventory.For most FBA and Shopify importers that means:
- Product (commercial invoice, plus packaging or inspection you paid)
- International freight
- Insurance
- Duty, brokerage, and entry fees
- Port and inland to the warehouse or Amazon
- Receiving or prep required to make the unit sellable
Companies draw the last one or two lines differently.
The idea does not change.
Landed cost is the real cost to acquire inventory.
Customer ads, referral fees, and pick/pack after the unit is already stock are selling costs.
Do not pour those into this number unless your accountant says to.
Why The Gap Matters
Teams do not lose margin because they cannot add.
They lose it because they approve and price on an incomplete number.
The same 2,000-unit shipment used on the supplier software page:
| Line | Amount |
|---|---|
| Factory invoice | $12,800 ($6.40 × 2,000) |
| Ocean freight (revised after booking) | $3,050, not the $2,200 in the sheet |
| Duty and brokerage | $1,140 |
| Trucking + FBA inbound prep | $860 |
| Sellable units received | 1,970 (30 failed inspection) |
Sheet version, first freight quote, PO quantity: $8.50.
After the documents and the shortage: $9.06.
Price or reorder off $8.50 and every unit is $0.56 light before ads, storage, or returns.
On that cadence, about $1,100 of cost never reached the listing.
The freight change was in an inbox.
The shortage was on the packing list.
Neither made it into the number someone used.
That is why landed cost matters:
- Margin. Factory cost overstates what you earned. You underprice and then call it a "promo problem."
- Factory choice. A cheaper ex-factory quote can lose after freight, duty, and receiving friction. True cost, factory to warehouse is that comparison with stages.
- Pricing floor. You cannot set a healthy price on a number that is missing the ocean bill.
- Where the money went. Often shipping, duty, or prep, not the factory. You cannot negotiate a line you never recorded.
- The next PO. Estimate before you commit. Reconcile after receipt. The how-to is that loop. Stay here for why you run it.
What Landed Cost Is Not
Not the supplier invoice. That is one input.
Not freight. Freight is often the largest add.
Duty, brokerage, and inbound prep still move the unit.
Not total cost of ownership. TCO can include returns, storage overhead, and post-sale service.
Landed cost stops when the unit is available to sell.
Not COGS by itself. COGS is the accounting treatment of what leaves inventory when you sell.
Landed cost vs COGS is that line.
You still need a honest inbound unit before either report is useful.
Not a checkout DDP quote. Shopify can collect duty at checkout.
That is a customer charge.
Inventory landed cost is what you paid to stock the unit.
Shopify landed cost splits those two.
Why Teams Cannot Keep The Number
The formula is addition and a division.
The files are the problem.
Quotes live in a sheet.
Freight lives in email.
Duty lives in a broker PDF.
Margin lives in a different report.
So landed cost gets built for a board slide, then ignored until the next surprise.
Spreadsheet vs software is that tradeoff.
A sheet is honest while one person owns it.
It fails when the revised freight bill never replaces the estimate.
Shared charges need a driver before they hit a SKU.
Units when the SKUs are alike.
Weight or cube when the carrier bills that way.
Value when the fee follows customs value.
Allocating freight across SKUs is the worked split.
A flat average makes a bulky cheap item fund a dense expensive one.
Estimate Before The PO, Reconcile After Receipt
Do it twice: before you commit, and after it lands.
Not when finance asks.
Before you commit. Current factory price, a freight number from this season, expected duty.
If the SKU misses the margin target, change quantity, terms, or the buy.
Hoping the ocean market helps you is not a plan.
After it lands. Replace estimates with bills.
Divide by sellable units, not the PO quantity.
That second number is what you price the next run from.
The landed cost calculator is a fast first pass.
The import duty calculator tightens the duty line when the heading is the uncertain part.
Filing the bills is organize supplier invoices.
Tracking the lines over time is shipping and manufacturing costs.
When the POs repeat and the PDFs already exist, the hard part is keeping the order, the documents, and that unit cost in one place.
SupplyAutomate is built for that.
Plans are on pricing.
When you want the arithmetic next, the how-to walks a $10 invoice to $14.10.