Landed cost is the total cost of obtaining a product and bringing it to the required location. It may include supplier price, freight, insurance, duties, taxes that are not recoverable, customs fees, handling, and other charges needed to make the item available.
How is Landed cost applied?
The business starts with the supplier price and adds the costs required to bring the goods to the chosen destination and condition. Depending on the transaction, these can include freight, insurance, duties, taxes, brokerage, handling and inland delivery. The calculation should state its Incoterm, currency rates, quantities and exclusions so quotations and supplier comparisons use the same basis.
Quick reference for Landed cost
| Check | What it means for the transaction |
|---|---|
| Category | Pricing and profitability |
| Record to keep | Record the cost basis, currency, quantity, customer scope, effective period and approval behind the amount when they apply. |
| Do not infer | A price label alone does not establish margin, landed cost or the final invoiced amount. |
