How to calculate landed cost for a closeout load

How do you calculate landed cost?

Add every cost to get the load onto your shelf: purchase price, freight in, accessorials, duties, taxes and brokerage if imported, insurance, handling and labor, storage and payment fees. Then divide by the units you can actually sell, after sorting losses and shrink. The result, cost per sellable unit, is the number to compare with your resale price.

Landed cost is the honest price of a load. The invoice is only the first line.

The formula

Landed cost per sellable unit = (Purchase price + Freight in + Accessorials + Duties, taxes and brokerage + Insurance + Handling and labor + Storage + Payment fees) ÷ Sellable units

Sellable units = Units received − Units lost to damage, shortage, defects and unsellable condition

Losses do not appear as a cost line. They appear by shrinking the divisor, which raises the cost of every unit that survives.

Each cost line explained

For freight numbers, see what it costs to ship a pallet LTL and what a full truckload costs. Rates move with fuel, season and lane, so get a written quote for the actual pickup and delivery points before you make an offer, and add any accessorial charges such as liftgate or residential delivery.

Step by step

1. Get the purchase price and terms in writing. Note whether the price is at the seller's dock or delivered.
2. Get a freight quote with the real pickup and delivery addresses, pallet count, dimensions and weight. Ask which accessorials apply.
3. List the accessorials you will need: no dock at your end means a liftgate; a set time means an appointment.
4. Add insurance if the goods are worth more than the carrier's liability limit.
5. For imports, add duties, taxes, brokerage and port charges. Ask a customs broker; do not guess the rates.
6. Estimate handling hours and multiply by your labor cost.
7. Estimate storage for the time before goods are sorted and sold.
8. Add payment fees.
9. Estimate losses from the condition type and the seller's history, and subtract them from units received.
10. Divide total cost by sellable units.

Worked example: domestic truckload

Letters stand in for the figures, because freight, labor and loss rates differ for every buyer and lane. A buyer looks at a truckload of shelf-pull home goods and fills in each line from quotes and their own records.

The invoice alone suggests P ÷ U per unit. The real cost is TLC ÷ (U − D). The numerator grew by every line after P, and the divisor shrank by D. Both moves push the cost up at once, which is why a buyer who prices from P ÷ U thinks they have margin and a buyer who prices from the full formula knows whether they do.

Why divide by sellable units, not units shipped?

Because you only earn money on the units you sell. Every damaged, missing or unsellable unit still had to be bought, shipped and handled, so its cost is carried by the survivors. Dividing by units shipped makes the load look cheaper than it is, and the gap is widest on the riskiest conditions.

Two loads can carry the same invoice price per unit and very different landed cost per sellable unit. Sealed new cases lose very little in sorting. Uninspected customer returns can lose much more, and the share varies by category and retailer. If you have bought from the same source before, use your own loss history. If you have not, be conservative and ask the seller for their written condition definitions.

How landed cost changes by lot type

The cost lines that dominate depend on the size and format of the lot.

For small lots, freight can be a large share of landed cost, so a lower price far away may lose to a higher price nearby. For full trucks, sorting and storage usually matter more. For containers, the lines after the port are the ones most often missed.

The export variant

Export loads add lines between your purchase and your shelf. Which ones you pay depends on the Incoterm you agree. Under EXW, you pay from the seller's dock onward. Under FOB (a sea term), the seller covers costs until the goods are loaded on board at the named port. Under CIF, the seller pays ocean freight and minimum insurance to the destination port, but risk passes to you at loading.

Typical extra lines for export:

• Drayage from the seller's warehouse to the port or container yard
• Container loading, or LCL consolidation charges
• Origin port and terminal charges
• Ocean freight
• Marine insurance
• Destination port charges and container handling
• Import duties and taxes at destination
• Customs broker fees at destination
• Inland delivery to your warehouse
• Currency conversion and international wire fees

Duty and tax rates depend on the product classification and the destination country's rules; ask a licensed broker in the importing country. FCL vs LCL for export compares container options, and closeout containers explains how export loads are usually built.

Mistakes to avoid

• Dividing by units shipped. Use sellable units. The difference can wipe out a margin.
• Bidding before you have a freight quote. Freight "to be confirmed" is a risk you carry.
• Leaving out accessorials. No dock means a liftgate; a late driver can mean detention.
• Treating your own time as free. Sorting returns takes hours, and those hours have a cost.
• Guessing duties. Ask a broker for the actual classification and rate.
• Forgetting that losses are uneven. Sealed cases lose little; uninspected returns can lose much more. Use the right allowance for the condition. See condition terms explained.

Using landed cost to set your bid

Once you know what each sellable unit will cost apart from the purchase price, you can work backwards to the most you can pay for the goods. That method is in what percent of retail to pay for closeouts. If the asking price is above it, how to make a counter-offer that works shows how to close the gap with terms like fast pickup. The closeout pricing pillar ties it together.

Skyline Dealz Marketplace offers loads to approved buyers, and each listing shows the ship-from location, so you can get a freight quote before you offer. If you buy for resale, you can request access and browse wholesale home goods and other categories.