What Does it Cost?

Landed cost is an essential way to calculate your company’s bottom line by representing the total cost of a product on its journey from the factory floor to your buyer’s door.

It includes the price of goods, shipment costs, insurance fees, customs duties, and any other charges incurred along the way.

Not only is knowing how to calculate landed cost important, it is necessary to running a successful business.

There are obvious and hidden costs associated with getting any product to your customers. As such, the true cost of the products you sell may sometimes seem opaque.

But knowing your landed cost can bring clarity, allowing you to assess how your business is performing, maximize your pricing, and ensure that you know exactly how much you are paying for your inventory.

It also provides you the opportunity to analyze your supply chain and determine where it might be worth cutting costs.

This information enables you to calculate whether or not you will be able to make a profit on your products or even if your business model is sustainable.

But calculating landed cost can be difficult if you do not yet know your full expenses or lack the experience to anticipate how high the additional fees that often come up in shipping will be.

The key is to have the right set of tools to be able to anticipate and estimate a value that is as close to your actual costs as possible.

Figuring out your landed cost can be tricky.

Estimate too high and you may lose out on sales because of your pricing.

Estimate too low and your profits could suffer.

That is why it necessary to have the right tools.

Remember: your initial estimate is just that. An estimate. Our calculators are a great way to get a solid idea of your costs, but you should always perform another landed cost calculation once you have your final numbers.

This is the basic equation that you will be calculating:
Shipping + Customs + Risk + Overhead = Landed Cost

While marking up prices is one way to reduce your total landed costs, a landed cost analysis can help you uncover additional opportunities that could potentially make an even bigger impact — without putting the burden on your customers.

One of the most effective ways to use a landed cost analysis to reduce expenses is to audit your supply chain partners. Remember, the lowest price doesn’t always translate into the biggest profit.

Unexpected fees could raise your total landed cost. Price compare different manufacturers, suppliers, 3PLs, shippers, etc. and research the TRUE net landed cost to determine which is the best fit for your growing business. You could also try to negotiate better rates and package with your existing partners.