LANDED COST
How to Calculate Landed Cost
Landed cost adds the purchase price and the costs required to bring an item to the point where it can be used or sold.
SHORT ANSWER
Start with the inputs you can verify
Landed cost adds the purchase price and the costs required to bring an item to the point where it can be used or sold.
What the estimate means
Typical additions include freight, insurance, duty, brokerage, handling, and other directly attributable charges.
Allocate shared shipment costs using a defensible basis such as weight, volume, value, or units.
Where estimates go wrong
Record whether taxes are recoverable before including them as a true cost.
Keep the source measurements and assumptions with the result so another person can review or update the estimate later.
A practical workflow
- Define the destination and cost boundary.
- Collect item and shipment-level charges.
- Choose an allocation method, document it, and compare suppliers on the same basis.