Landed Cost
The total cost of a product once it reaches a warehouse, including unit price, freight, duty and insurance - beyond what the supplier invoiced.
In practice
Businesses that price products off supplier cost alone, without accounting for landed cost, often end up with thinner margins than expected once freight, duty, and insurance are factored in - especially on international shipments where those add-ons can be substantial.
A product costs $5 from the supplier, but by the time freight, duty, and insurance are added, the true landed cost per unit is $7.80.
Why it matters
Pricing a product off supplier cost alone, without landed cost, is one of the most common ways an ecommerce business quietly erodes its margin on international sourcing.
Worth knowing
- Includes unit cost, freight, duty, insurance, and sometimes customs broker fees.
- Should be recalculated whenever freight rates, duty rates, or exchange rates shift meaningfully.
- Useful for comparing suppliers fairly - a lower unit price doesn't always mean a lower landed cost.
Related terms
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