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Landed Cost Calculator

Split freight, duty and every other shipment charge across your products, properly.

What is landed cost?

Landed cost is the total cost of getting one unit of a product to your warehouse and ready to sell. It is the supplier price plus that unit's share of freight, import duty, customs brokerage, inspection and any other charge billed against the shipment as a whole.

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Currencies

Products

Your shipment

ProductSKUQtyUnit priceLine totalWeight (kg)

Charges

Shipment charges

Freight, duty and anything else billed across the whole shipment. These are shared across your products, not charged to one of them.

Enter a quantity and a price to see your landed costs.

The formula

The landed cost formula

Landed unit cost = (Goods cost in your currency + allocated share of every shipment charge) / units

Landed cost is the true per-unit cost of getting a product onto your shelf: the supplier invoice converted into your currency, plus that unit's share of freight, duty, inspection and brokerage. It is the number your COGS should use, and it is almost always higher than the invoice line.

Goods cost
Unit price x quantity, from the supplier invoice, converted at the FX rate you actually paid rather than the mid-market rate on the day.
Shipment charges
The lump sums that arrive on the shipment rather than the product: freight, duty, tax, inspection, brokerage. They apply to the whole consignment, not to one SKU.
Allocation basis
How each lump sum is divided across lines. By value splits it in proportion to goods value, by quantity splits it per unit, and by weight splits it per kilogram.
Allocated share
Charge x (this line's basis / the shipment total for that basis). Freight allocated by weight and duty allocated by value in the same shipment is normal and often more accurate.
Landed unit cost
The line's landed total divided by its units. This is what belongs in your COGS field, not the supplier unit price.
  • Allocation basis changes per-SKU cost but never the shipment total. Every allocation reconciles exactly back to what you paid, to the cent.
  • Freight is usually fairest by weight or volume, duty by value because it is normally assessed on declared value, and inspection by quantity when the inspector charges per unit.
  • If a basis sums to zero across the shipment, for example allocating by weight with no weights entered, the charge is split evenly instead and the tool flags it.

Worked examples

Three worked examples

The first two use the same shipment and change only the allocation basis, which is the fastest way to see why the choice matters. The third adds an FX conversion.

Example 1

Two SKUs, everything allocated by value

One shipment, two products, $750 of freight and duty split in proportion to what each line is worth. This is the default and the right choice when your SKUs have a similar weight-to-value ratio.

Inputs

Line A
200 units at $6.00 = $1,200
Line B
100 units at $18.00 = $1,800
Freight
$600
Duty
$150
Allocation
By value

Working

  1. Goods total: $1,200 + $1,800 = $3,000
  2. Charges total: $600 + $150 = $750
  3. Line A share: $1,200 / $3,000 = 40%, so $750 x 40% = $300
  4. Line B share: $1,800 / $3,000 = 60%, so $750 x 60% = $450
  5. Line A landed: $1,200 + $300 = $1,500, over 200 units = $7.50
  6. Line B landed: $1,800 + $450 = $2,250, over 100 units = $22.50

Landed unit cost

$7.50 and $22.50

Charges add 25% on top of goods cost across the shipment. Costing Line A at the $6.00 invoice price would overstate its margin by $1.50 on every unit sold.

Example 2

The same shipment, freight allocated by weight

Identical products and charges, but Line A is the bulky one: 0.5kg per unit against 0.2kg. Freight now follows weight while duty stays on value.

Inputs

Line A
200 units, 0.5kg each = 100kg
Line B
100 units, 0.2kg each = 20kg
Freight
$600, by weight
Duty
$150, by value

Working

  1. Shipment weight: 100kg + 20kg = 120kg
  2. Line A freight: $600 x (100 / 120) = $500
  3. Line B freight: $600 x (20 / 120) = $100
  4. Duty by value as before: Line A $60, Line B $90
  5. Line A landed: $1,200 + $500 + $60 = $1,760, over 200 units = $8.80
  6. Line B landed: $1,800 + $100 + $90 = $1,990, over 100 units = $19.90

Landed unit cost

$8.80 and $19.90

Same shipment, same $3,750 total, but Line A moved from $7.50 to $8.80 per unit, up 17%. Allocating heavy, cheap goods by value quietly subsidises them out of your margin on the expensive lines.

Example 3

Importing in USD, selling in AUD

A single SKU bought in US dollars and landed in Australia, where freight is billed locally and duty is assessed on the converted value.

Inputs

Line
500 units at $4.20 USD
FX rate
1 USD = 1.55 AUD
Freight
A$900, billed locally
Duty
5% of goods value

Working

  1. Goods in USD: 500 x $4.20 = $2,100
  2. Goods in AUD: $2,100 x 1.55 = A$3,255
  3. Duty: A$3,255 x 5% = A$162.75
  4. Charges total: A$900 + A$162.75 = A$1,062.75
  5. Landed total: A$3,255 + A$1,062.75 = A$4,317.75
  6. Landed unit cost: A$4,317.75 / 500 = A$8.64

Landed unit cost

A$8.64

The converted goods cost alone is A$6.51 a unit. Landed cost is 32.7% higher. Pricing off the invoice line here would put every margin calculation in the business a third out.

The allocation is the whole problem

Landed cost is simple to define and awkward to compute. The definition is uncontroversial: everything you paid to get a unit into your warehouse, divided by the units. The awkwardness is that the charges do not arrive per unit. Your forwarder bills one freight amount for a container. Customs assesses duty on the shipment. The inspection company invoices per visit, not per SKU. You are left holding four lump sums and a packing list of thirty products, and no obvious way to connect them.

Whatever you do next is an allocation choice, including doing nothing. Spreading freight evenly across SKUs is a choice, and usually a bad one, because it charges a pallet of ceramics the same freight as a box of stickers. The three defensible methods are by value, by weight and by unit count, and which is right depends on what the charge was actually driven by.

Freight is driven by space and mass, so weight is normally the honest allocation, and volumetric weight is closer still if your forwarder billed that way. Duty is assessed on declared customs value, so value is the correct basis and anything else will disagree with your own customs paperwork. Brokerage and inspection are usually per-shipment overheads with no per-product driver at all, in which case units or value are both reasonable and the difference is small. This calculator lets you set a default and then override it per charge, because a real shipment usually needs more than one rule.

Two details matter more than they look. First, freight to your country is very often invoiced in your own currency even though the goods are priced in the supplier's, so each charge here carries its own currency and only the ones that need converting get converted. Second, the arithmetic has to reconcile: your per-line landed costs must add up to the shipment total to the cent, or you will spend an afternoon hunting a rounding difference. Every column below is reconciled exactly, on purpose.

Common Questions

Frequently Asked Questions

What is the landed cost formula?

Landed cost per unit equals the line total for that product, plus its allocated share of every shipment-level charge, divided by the quantity. The allocated share depends on whether you split the charge by value, by weight or by unit count.

Should I allocate freight by weight or by value?

By weight, in most cases. Carriers price on mass and volume, so weight tracks what actually drove the bill. Value allocation overcharges expensive light items and undercharges cheap heavy ones, which is how a dense low-margin product ends up looking profitable.

Does landed cost include customs duty?

Yes. Duty is a cost of importing the goods and belongs in landed cost. Allocate it by declared value, since that is the basis customs used to assess it.

What about GST or VAT on imports?

It depends on whether you can claim it back. If you are registered and recover the import GST or VAT, it is not a cost and should not be in landed cost. If you cannot recover it, it is a genuine cost and belongs there.

How do I handle a charge billed in a different currency?

Set that charge's currency using the selector beside it. Freight is frequently invoiced locally while the goods are priced in USD, so each charge is converted, or not, independently of the others.

Why do the totals need to reconcile exactly?

Because you will reconcile them against the supplier invoice, and a rounding drift of a few cents across thirty lines is indistinguishable from a data-entry mistake. The per-line figures here sum exactly to the totals shown.