What is landed cost?

A beauty supply shop orders 100 packs of hair extensions at $4.00 each from an overseas supplier. The invoice is $400, but the shop also pays:

• Freight: $60
• Customs duty: $40
• Broker and port handling: $20

Total: $400 + $60 + $40 + $20 = $520. Landed cost per pack = 520 / 100 = $5.20, not $4.00.

That changes the margin. The shop sells each pack for $8.00. Using the invoice price, profit looks like $4.00 a pack, or 50%. Using landed cost, profit is $8.00 - $5.20 = $2.80, which is 35% of the selling price. Pricing off the wrong number can quietly turn a good product into a poor one.

• Leaving out small fees. Courier, port and broker charges add up.
• Spreading costs unevenly. If several products share one shipment, split freight in a consistent way, by units or by value.
• Forgetting exchange rates. Pay in US dollars and the cost in your own currency shifts between orders.
• Never updating the cost. When the next shipment costs more, the old figure makes you underprice.

Duty and tax rules differ by country and product, so check with your customs authority or an accountant for the rates that apply to you.

Shopkeepa reports gross profit where cost is known. Enter the landed cost as a product's cost, and your profit figures reflect what the product really cost you. The markup and margin calculator helps you choose a price from it.