Landed Cost
What Is Included in Ecommerce Landed Cost?
Landed cost is the real per-unit cost before a product is sold in the destination market. It is not just supplier price plus freight. If landed cost is underestimated, pricing, margin, and ad-spend decisions all become unreliable.
Typical landed cost items include product cost, packaging, origin handling, international freight, duty, VAT or GST, customs clearance, destination handling, prep, relabeling, and warehouse processing. The model varies by lane, but the principle is fixed: include every cost required to place sellable inventory in the target warehouse.
How to Allocate Shipment-Level Fees
Freight and prep quotes often come as whole-shipment totals. Convert them into unit values before margin planning. Example: for 300 units, freight 420 USD and prep 90 USD means 1.7 USD per unit for those two lines before duty and tax.
Volume and dimensional weight matter for bulky categories. Reducing package size can improve landed cost more than negotiating a small supplier discount.
Landed Cost Workflow
- Confirm supplier unit cost and order quantity.
- Add packaging, inspection, and origin handling.
- Compare freight options and transit risk.
- Estimate duty, tax, and clearance charges by market.
- Divide total pre-sale cost by units for true landed cost.
Example
For a product at 5.8 USD unit cost, 300 units, 420 USD freight, 8% duty, and 90 USD prep, the landed cost calculator gives a realistic unit baseline. Then apply that result to the profit calculator to test pricing and ad feasibility.
FAQ
Is the lowest landed cost always best?
No. A low quote with unstable lead time can increase stockout and cash pressure. Use a balance of cost, reliability, and inventory turnover.
How should first-order landed cost be estimated?
Use conservative assumptions and fully allocate ticket-level fees. Avoid best-case quotes until you have actual shipment and customs data.