What is Landed Cost?
Nexa Consultancy | Startup & Finance Glossary
The Landed Cost is the total cost of a product once it has arrived at the buyer's doorstep. It is a critical calculation for businesses that import goods. It includes not only the original cost of the item but also all shipping fees, customs duties, taxes, insurance, and currency conversion fees.
For Startups: For a D2C startup that sources its products from overseas, understanding the true landed cost is essential for accurate pricing and profitability analysis. Simply looking at the supplier's price is misleading; the landed cost represents the true Cost of Goods Sold (COGS) for that imported item.
Example: A startup buys a product from China for $10. After adding shipping ($2), customs duty ($1), and insurance ($0.50), the total landed cost is $13.50. This is the figure that should be used to calculate the product's gross margin.