Landed cost calculator

How to calculate landed cost for a purchase order

1. Paste your lines. One line per SKU: SKU, quantity, unit cost. Add a fourth column with the weight of one unit if you want to spread a cost by weight. A purchase order exported from a spreadsheet pastes as it is.
2. Enter the shared costs. Freight is on the carrier or forwarder invoice. Duty is on the customs entry, or the broker's statement. Brokerage, port fees, insurance and inspection go in the other rows. Leave a row empty to ignore it.
3. Pick how each cost is spread. By value, by units, or by weight. The table and the arithmetic update as you change them.
4. Read the last two columns. Landed per unit is the number to cost the stock at. Uplift shows how much the shipment added on top of what you paid the supplier.

A worked example

The sample is a 5,100-unit order of four made-up products. Goods come to $19,305.00. Freight is $1,200.00 spread by value, duty is 6.5% of goods ($1,254.83) spread by value, and $180.00 of brokerage fees is spread by units. That adds $2,634.83, so the order lands at $21,939.83.

Take the mug. It is 2,400 units at $2.10, so $5,040.00 of the $19,305.00, or 26.1% of the goods. It takes 26.1% of the freight ($313.29) and of the duty ($327.60). Its fee share is 2,400 ÷ 5,100 of $180.00, which is $84.7059. Rounding every line down leaves three cents over, and they go to the three lines with larger fractions than the mug's, so the mug keeps $84.70. That is $725.59 added to $5,040.00, a landed total of $5,765.59, or $2.4023 a unit. The shipment added 14.4% on top of the $2.10 you paid the supplier. Put the other way, $2.10 is 12.6% below what the mug really cost to land.

Spread the same $1,200.00 of freight by weight instead and the mug takes $392.98 where it took $313.29 by value. Mugs are heavy for the money, so a value split flatters them and a weight split does not. The kettle goes the other way: $336.84 by weight against $365.50 by value. Neither split is wrong. Pick the one closest to how the carrier charged you.

How each cost is spread

A shared cost is divided in proportion to a basis. Take the cost, divide a line's basis by the total basis, multiply. With value as the basis, a line worth 26.1% of the goods carries 26.1% of the cost. With units, a line holding 47% of the units carries 47%. With weight, the basis is quantity times unit weight, in any one unit as long as you stay in it.

A percent cost, like duty, is first turned into money: the rate times the total goods value. That money is then spread the same way. Every share is rounded down to the cent, and the cents left over go one at a time to the lines with the largest remainders, so the shares add up to the cost exactly and the lines add up to the order total.

What it leaves out

One duty rate per cost row, so an order with several tariff codes needs a run per rate. Duty here is a rate on the goods value, and in some countries the customs value also includes international freight and insurance, so confirm the base with your broker. Exchange rates are not applied: convert the unit costs and the shared costs to one currency first. Costs that arrive later, such as a freight bill that lands after the stock has sold, are not tracked here; when a unit's cost stops changing covers how we treat them. Cost per unit is for costing stock, not for setting your price.

Why this matters past the purchase order

If freight and duty never reach the unit cost, every margin report built on that cost is too high, and the SKUs hurt most are the cheap heavy ones. Doing it in a spreadsheet works for one shipment. It stops working when there are several shipments a month, each with its own freight bill, and the costs have to sit on the stock that arrived. That is the point where it belongs in your inventory system. There is more on costing stock from what each unit actually took in same SKU, different parts.