Landed Cost
Definition
The total cost of getting a purchased item to your door, including the unit price plus freight, insurance, duties, taxes, and handling charges.
In Practice
Landed cost answers the question the invoice price hides: what does this item really cost once it arrives? The calculation adds international and domestic freight, cargo insurance, customs duties and tariffs, brokerage fees, port and handling charges, and sometimes currency effects to the ex-works price. Comparing suppliers on unit price alone systematically favors distant, low-price sources whose logistics costs erase the advantage.
For sourcing decisions, landed cost is the honest comparison basis. A 15 percent cheaper unit price from an offshore supplier can easily become more expensive after ocean freight, a 6 percent duty, and the extra inventory needed to buffer a long lead time.
Example: a buyer compares a domestic pump at 92 dollars delivered against an imported one at 78 dollars ex-works. Adding 9 dollars freight, 5.50 duty, and 3 dollars handling brings the import to 95.50, so the domestic source wins despite the higher sticker price.
Related Calculators
Related Terms
The complete cost of acquiring an item from a supplier, including price, logistics, transaction costs, quality costs, and inventory costs, not just the quoted unit price.
Should-Cost AnalysisAn estimate of what a product or service ought to cost, built bottom-up from materials, labor, overhead, and margin, used to evaluate supplier prices objectively.
Supplier Lead TimeThe elapsed time from placing an order with a supplier until the goods are received and available for use, including production, transit, and receiving.