Glossary
Landed Cost
The total cost of a product or shipment, including the purchase price and other fees incurred up to the point of delivery.
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What is Landed Cost and How is it Calculated?
In the context of shipping, landed cost refers to the total cost of a product or shipment, including the cost of the product, transportation, duties, taxes, customs fees, and any other costs incurred to bring the product to its final destination.
The formula for calculating landed cost can be expressed as:
Landed Cost = Cost of Goods + Freight Cost + Insurance + Customs Duties + Taxes + Other Fees
For example, let’s say a company in the United States imports a shipment of goods from China with a total cost of $10,000. The freight cost to transport the goods is $2,000, insurance is $500, and customs duties and taxes are $1,000. The landed cost for this shipment would be:
Landed Cost = $10,000 + $2,000 + $500 + $1,000 = $13,500
Calculating landed cost is essential for companies that import or export goods, as it helps them determine the total cost of a product and set the selling price. By accurately calculating the landed cost, businesses can make informed decisions regarding pricing, sourcing, and shipping methods, which can ultimately impact their profitability.
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