---
title: "What is landed cost?"
description: "Landed Cost explained in plain English: definition, how it works, an example, and how it appears in QuickBooks and Xero."
url: https://ledgerbpo.com/glossary/landed-cost/
updated: 2026-09-11
publisher: LedgerBPO (SS Support Network LLC)
language: en-US
---

# What is landed cost?

Glossary

Landed cost is the total cost of getting a product from the supplier into your warehouse ready for sale, including the purchase price, freight, customs duties, insurance and handling fees. It gives a more accurate per-unit cost than the purchase price alone.

Updated September 2026

## How landed cost works

Businesses that import or ship inventory in bulk add up every cost tied to getting goods delivered, then allocate that total across the units received, usually by value, weight or quantity, to get a per-unit landed cost. Freight and duty invoices often arrive separately from the supplier bill and sometimes weeks later.

Using landed cost instead of just the purchase price matters most for margin and pricing decisions, because a cheap unit price can hide high freight or duty costs that erase the profit on a sale. Businesses that skip this step often underprice products bought from suppliers with high shipping or import costs. Some businesses also build a landed cost estimate into their purchase order before goods ship, comparing it later to actual costs once freight and duty invoices arrive, to catch pricing or supplier issues early.

## Example

A retailer buys 500 units at $10 each, $5,000 total, pays $600 freight and $400 in customs duty, for $6,000 total. Allocating the extra $1,000 evenly across 500 units adds $2 per unit, giving a landed cost of $12 per unit instead of the $10 purchase price. Pricing the item at $15 now shows a true $3 margin, not $5. If the same retailer negotiates a lower freight rate on its next shipment, its landed cost per unit drops accordingly, giving it room to either improve margin or offer a more competitive price.

## Landed cost in QuickBooks Online vs Xero

QuickBooks Online does not calculate landed cost automatically, so businesses typically use a bill with multiple line items or a third-party app to allocate freight and duty across inventory items. Xero, paired with an inventory app like Dear or Cin7, can automate landed cost allocation across purchase orders based on weight or value.

## Related terms

- [COGS](https://ledgerbpo.com/glossary/cogs/)
- [Inventory shrinkage](https://ledgerbpo.com/glossary/inventory-shrinkage/)
- [Gross margin](https://ledgerbpo.com/glossary/gross-margin/)
- [All terms](https://ledgerbpo.com/glossary/)

## How LedgerBPO handles landed cost

We build a landed cost workflow that allocates freight, duty and handling across your inventory receipts, so your per-unit cost and margin reporting reflect what products actually cost to land, not just the supplier's invoice price. This gives you accurate numbers for pricing decisions and gross margin by product.

[Inventory and cost of goods that match your shelves](https://ledgerbpo.com/services/inventory-accounting/)

Next step

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Source: https://ledgerbpo.com/glossary/landed-cost/ · Contact: https://ledgerbpo.com/contact/ · Full site map for agents: https://ledgerbpo.com/llms.txt