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What Is Landed Cost and How to Calculate It

Landed cost is your all-in cost to get a product into inventory, ready to sell.

Definition

Landed cost is the full amount you pay to get product from the supplier to your warehouse or receiving dock, including freight, duties, insurance, and handling.

It gives you a true unit cost, not just the supplier invoice price.

In wholesale, that number helps you set prices, compare suppliers, and protect margin when shipping or import charges change.

How it works

Start with the product invoice price. Then add every direct cost tied to delivery and receipt. Common items include inbound freight, customs duties, brokerage fees, drayage, packaging changes, and warehouse receiving charges.

If you buy by the case, divide the total landed cost by the number of sellable units in that case. If you buy by the pallet, divide by the total cases or units on the pallet. The goal is the cost per unit you can actually sell.

You can calculate landed cost before purchase, but you should also refresh it after the shipment arrives. Fuel surcharges, port delays, carton damage, and accessorial fees can change the final number.

Why it matters

A supplier quote can look clean while the delivered cost tells a different story. If you ignore freight or duty, your margin may look healthy on paper and shrink after the order lands.

Landed cost also helps you compare sourcing options on the same basis. Two suppliers may list the same item at different invoice prices, but the one with lower freight, fewer fees, or better pack-out can cost less overall.

For distributors and brands, landed cost supports better buying decisions. It helps you decide when to raise prices, when to change case packs, and when to reject small orders that carry too much shipping cost per unit.

Examples

Example one: you buy a case for $24, pay $3 in inbound freight, and incur $1 in receiving and handling. Your landed cost is $28 for the case. If the case contains 12 units, your landed cost per unit is $2.33.

Example two: you import a product with an invoice price of $10, add $1.50 in ocean freight allocation, $0.40 in customs duty, and $0.10 in brokerage per unit. Your landed cost is $12 per unit.

Example three: you source locally and the invoice looks higher, but the freight is much lower. In that case, the landed cost can come in below the lower-priced quote once you include delivery charges.

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Landed cost formula components
Cost itemWhat it coversInclude it in landed cost?
Invoice priceSupplier unit or case priceYes
Inbound freightCarrier charges to move goods to youYes
Duties and tariffsImport taxes and related chargesYes
BrokerageCustoms clearance feesYes
InsuranceCoverage for transit riskYes
Receiving and handlingWarehouse intake labor or feesYes
Storage after receiptOngoing warehousing costUsually no in basic landed cost

FAQ

What is the difference between landed cost and invoice price?

Invoice price is what the supplier charges for the product. Landed cost adds the direct costs needed to get that product to your receiving point. In wholesale, landed cost gives you the number you should use for margin and pricing decisions.

Should I include storage in landed cost?

Usually no for a basic calculation. Most buyers include costs tied to purchase, transport, import, and receipt. If you want a broader all-in view, you can add storage, shrink, or finance costs, but keep that separate from the core landed cost figure.

How do I calculate landed cost per unit?

Add the invoice price and all direct inbound costs, then divide by the number of units you can sell. If you buy cases, divide by cases. If you buy pallets, divide by the total sellable units or cases on the pallet.

Why does landed cost change after I place an order?

Freight rates, duties, fuel surcharges, port delays, accessorial charges, and damage can all change the final amount. That is why many operators estimate landed cost before purchase and reconcile it again after the shipment arrives.

Can landed cost help with pricing strategy?

Yes. Once you know the true cost to receive a product, you can set wholesale prices with a clearer margin target. It also helps you compare suppliers on the same basis instead of relying on invoice price alone.

Put landed cost into your pricing workflow

Use the calculator to turn freight, duty, and handling into a unit cost you can price against.

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Last reviewed 2026-10-24.

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