Landed cost: what a load really costs you
Landed cost is the total cost of getting goods to your door and ready to sell: the purchase price plus freight, insurance, duties and taxes, port and handling fees, payment costs and any processing. For closeout buyers it is the number that decides whether a deal makes money, more than the headline price or percent of retail.
Reviewed by Tyler Kober · Updated
Key takeaways
- Landed cost = purchase price + every cost to get the goods sellable at your location.
- Divide by sellable units, not total units, to get a cost you can price against.
- For exports, duties and destination charges can be a large share; get local figures before you buy.
What is landed cost?
Landed cost is everything you pay to get goods into your store, warehouse or container yard and ready to sell. It starts with the purchase price and adds freight, insurance, duties, fees, payment costs and processing. It is the cost you should price your resale against.
How closeout buyers use landed cost
The standard build-up:
| Cost line | Domestic buyer | Export buyer |
|---|---|---|
| Purchase price | Yes | Yes |
| Freight to your location | Truck or LTL | Trucking to port, ocean freight, inland freight at destination |
| Insurance | Optional | Recommended; minimum under CIF |
| Duties, taxes, customs brokerage | Rarely | Yes, by destination country |
| Port and terminal fees | No | Both ends |
| Payment and bank fees | Small | Wire fees, currency conversion |
| Processing | Sorting, testing, relabeling | Same, plus any destination labeling |
| Disposal of unsellable units | Yes | Yes |
Then divide by sellable units. A load with a low price and a high unsellable share can have a higher landed cost per sellable unit than a cleaner load at a higher price.
Example
An exporter compares two loads of household goods. Load A is cheaper but sits far from the port and needs heavy sorting. Load B costs more but is near the port, pre-sorted and palletized. After adding inland trucking, sorting labor and the expected unsellable share, Load B has the lower landed cost per sellable unit. The exporter buys B.
The common confusion
People mix up landed cost with the price on the invoice, or with percent of retail. The invoice is one line of landed cost; percent of retail is a pricing shorthand that ignores everything after the sale. Another trap: for imports, duty is usually charged on a customs value set by the destination's rules, which may include freight and insurance. Check with a customs broker. The step-by-step method is in how to calculate landed cost.
Related terms
Frequently asked questions
What goes into landed cost?
The purchase price; freight from pickup to your location; insurance; customs duties, taxes and brokerage for imports; port, terminal and handling fees; bank and payment fees; and processing such as sorting, testing, relabeling and disposal of unsellable units. Leave nothing out, because each line comes straight off your margin.
How do I calculate landed cost per unit for a closeout load?
Add up every cost in the landed cost list, then divide by the number of units you expect to sell, not the number on the manifest. If you expect part of the load to be unsellable, that share raises the cost of every good unit. Compare that figure with your expected selling price per unit.
Why is landed cost more useful than percent of retail?
Percent of retail only compares the price with a retail figure. It ignores freight, duties, condition and processing. Two loads at the same percentage can have very different landed costs, especially when one is far away, needs heavy sorting or faces import duties. Landed cost tells you what you actually paid.
Related
Send a list or manifest and we'll come back with an offer. Approved buyers see live loads, prices and manifests. Or call +1 215 278 4122.