Landed Cost
Also called: fully landed cost
What is Landed Cost?
Landed cost is the full cost of getting a purchase into your premises: the supplier's price plus freight, loading, duties, non-creditable taxes, insurance and handling. It is the honest cost base for pricing.
Why Landed Cost matters
Pricing off the invoice price alone quietly erases margin on anything heavy, imported or shipped far. On low-margin goods, freight alone can be the difference between profit and loss.
Landed Cost formula
Landed cost = Purchase price + Freight + Duties + Handling + Non-creditable taxes
Divide by quantity received for the per-unit figure used in pricing.
How Landed Cost works in practice
Allocate shared freight across a consignment by value or weight, and store the landed figure against the item rather than in a separate note. Otherwise the adjustment gets forgotten the moment prices are next reviewed.
Worked example
₹50,000 of goods with ₹3,000 freight and ₹1,000 unloading lands at ₹54,000 — an 8% higher cost base than the invoice suggests.
Frequently asked questions
Only the portion you cannot claim as input tax credit.