Landed Cost
Landed cost is the full cost of getting one unit into sellable condition: the supplier's unit price plus its share of inbound freight, customs duties and tariffs, insurance, and prep or inspection fees. It's the number that belongs in COGS and inventory valuation. Most sellers who track costs at all track only the invoice price, which understates true cost by 20-40% for imported goods and quietly overstates every margin on the P&L.
Here's why the gap is so dangerous. A widget costs $6.00 from your supplier. Its share of ocean freight is $1.10, the tariff adds $0.90, and inbound prep is $0.35. Landed cost: $8.35, which is 39% above invoice. Price the product off the $6.00 and a listing you believe earns a 55% gross margin actually earns 38%. Multiply that error across a catalog and ad budget, and you're scaling SKUs that barely break even.
Landed cost also moves. Freight rates swing, tariff schedules change, and a product that penciled out in January can be underwater by June with nobody noticing, because the invoice price never changed. That's why we recalculate landed costs per receiving, not once a year. The mechanics of allocating freight and duty across a container are covered in our COGS formula guide, and it's standard in our monthly bookkeeping.
Where this shows up in our work
This isn’t textbook material for us; it’s the day-to-day of keeping seller books right. See how we handle it in practice:
Monthly Ecommerce Bookkeeping→