Landed cost is the total cost to get a product to your warehouse: supplier price plus freight, duties, insurance, and handling. Pricing on product cost alone underestimates true cost by 5-15%.

What costs are included in landed cost?

Product cost, freight/shipping, customs duties and tariffs, insurance, handling/receiving labor, and warehousing costs. Exclude costs after the product is in inventory (picking, packing, outbound shipping).

How much does freight add to product cost?

Domestic: 3-8%. International: 10-20%. Heavy/bulky products (building materials, HVAC): 8-12%. If freight exceeds these ranges, you likely have freight absorption eroding margin.

What is freight absorption?

When you don't fully recover freight costs in pricing. You charge $50 for a product costing $45 landed ($40 product + $5 freight). You think 10% margin, but true margin is 0%.

Should I calculate landed cost per order or per SKU?

Both. Per order for immediate profitability. Per SKU (averaged over orders) for pricing decisions. Some SKUs cost 20% more to land than others due to weight, origin, or handling needs.

How do I allocate freight across multiple SKUs?

Three methods: by weight (most common), by volume (for LTL), or by product value. Weight allocation is standard for general distribution.

What's a good landed cost as % of selling price?

Target 60-75% for wholesale distributors (25-40% margin). Above 80% means less than 20% margin—risky territory for distribution businesses.

How do customs duties impact landed cost?

U.S. import duties range 0-25%+ depending on HTS code and origin country. A $100K order with 5% duty adds $5K to landed cost. Many importers forget to include this in pricing.

Should warehousing be in landed cost?

Include receiving and putaway costs (getting product from dock to shelf). Exclude ongoing storage costs—those are operational overhead, not landed cost.

How can I reduce landed cost?

Negotiate freight rates, consolidate shipments, order larger quantities, source from closer suppliers, reclassify under lower-duty HTS codes, or use free trade agreements.

Landed Cost Calculator

Calculate the true cost to get a product to your warehouse. Most distributors price on product cost alone and lose 5-15% in hidden cost leakage.

Enter Your Data

Enter product cost, units, and freight to calculate landed cost

Industry Benchmarks: Landed Cost

These show typical freight and logistics costs as a percentage of product cost. If your freight exceeds these ranges, you may have freight absorption eating your margin.

Industry	Low	Average	High
Domestic Freight (% of product)	3%	5%	8%
International Freight (% of product)	10%	15%	20%
Building Materials Freight	8%	10%	12%
HVAC Equipment Freight	6%	8%	10%
Small Parcel / Electronics	5%	7%	10%
Import Duties (avg across categories)	0%	5%	25%

How to Use the Landed Cost Calculator

Step-by-Step Instructions

Enter supplier unit price and order quantity
Enter total freight/shipping cost for this order
Add duties, insurance, and handling if applicable
Optionally enter selling price to compare true margin vs product-only margin

Formulas Used

Landed Cost per Unit

Landed Cost = (Product Cost × Units + Freight + Duties + Insurance + Handling) / Units

Total cost to get one unit into your warehouse, including all costs beyond supplier price.

Freight as % of Product Cost

Freight % = (Freight / (Product Cost × Units)) × 100

Shows how much freight adds to your product cost. Above 8% warrants investigation.

True Margin

True Margin = ((Selling Price - Landed Cost) / Selling Price) × 100

Margin calculated on full landed cost, not just product cost.

Frequently Asked Questions: Landed Cost Calculator

Related Resources

More Calculators

Explore our other free pricing tools

Pricing Guides

Learn more about pricing optimization

Want to analyze your entire product catalog?

Pryse automatically identifies margin leakage across thousands of SKUs. Upload your data and find hidden profit in 24 hours.

Start free analysis View pricing

One-time $1,499 diagnostic. No subscription required.