Landed cost

Landed cost is the total cost of bringing goods to a specified destination and making them available there. It can include the purchase price, freight, insurance, duties and handling; calculations should state which costs and taxes are included.

Costs can be allocated to individual products by units, weight, volume or value, depending on what drives the charge. The calculation should distinguish recoverable taxes from actual business costs and state the destination used. Purchase price alone is misleading when two suppliers ship from different locations or quote on different delivery terms.

For example, goods costing £1,000 plus £200 transport and £100 non-recoverable import charges have a £1,300 landed cost under that scope. Allocating shared freight reasonably helps calculate each item's gross margin. Landed cost normally concerns bringing goods in, rather than the full lifetime cost of using equipment.