Inventory finance
Landed Cost
By the Supply Chain Manager team · Updated October 16, 2026
Landed cost is the full cost of getting a product into your warehouse: purchase price plus freight, insurance, duties, taxes, brokerage and handling.
For imported goods, the extras can be a large share of the unit price. Margins, pricing and supplier comparisons are only accurate when they use landed cost rather than the supplier's price.
Freight and duty can be allocated by units, weight, volume or value. The right basis depends on what drives the cost: freight usually follows weight or volume, duty usually follows value. Using a single per-unit allocation for a mixed container can make small, light items look more expensive than they are and heavy items cheaper.
How to calculate landed cost
Landed Cost per Unit = (Purchase cost + Freight + Insurance + Duties & taxes + Brokerage + Handling) ÷ Units received
Landed cost example
Illustrative numbers: 2,000 units at $5.00 ($10,000), plus $1,400 freight, $100 insurance, $600 duty and $200 brokerage. Landed cost = $12,300 ÷ 2,000 = $6.15 a unit, 23% above the supplier price.
Why landed cost matters for distributors
A product that looks profitable at supplier price may not be at landed cost. It also changes which supplier is really cheapest, especially between domestic and imported options.
Common landed cost mistakes
- Pricing from the supplier's price list instead of landed cost.
- Spreading freight evenly by unit when products differ greatly in weight or volume.
Examples on this page use made-up round numbers to show the calculation. They are not benchmarks or results from real businesses.