What is landed cost?

The supplier's unit price is where landed cost starts, not where it ends. Freight, customs duties and tariffs, insurance, brokerage fees, currency costs, and inbound handling all attach to the goods before they're usable. Landed cost rolls those into a true per-unit figure, and that figure, not the invoice price, is what margin should be calculated against. The gap can be decisive. A $10.00 unit from an overseas supplier with $1.80 of freight and $1.20 of duty lands at $13.00, while a domestic supplier quoting $12.50 with $0.30 freight lands at $12.80 and arrives three weeks sooner. Comparing supplier quotes on unit price alone reverses that decision. The mechanical work is allocation: a $1,400 freight bill covering a mixed container has to be spread across the items in it, by value, weight, or volume depending on what drives the cost. Imperfect allocation beats none; the common failure is dumping freight and duty into a general expense account, which makes imported goods look more profitable than they are and quietly distorts pricing, reorder, and supplier decisions. Where teams trip beyond that: computing landed cost once and ignoring drift. Freight rates and tariffs move. An item whose landed cost was modeled in January can be meaningfully different by August, and the price list built on the old number erodes margin silently.