Landed Cost
The total cost of a product at the point it arrives at your warehouse, including purchase price, freight, customs duties, insurance, and other import charges.
Landed cost is the complete cost of a product reaching your inventory, as opposed to just the supplier invoice price. For businesses that import goods, the landed cost includes: the purchase price (ex-works or FOB), ocean or air freight, customs duty and IGST on imports, port handling charges, inland transportation, and insurance. The difference between the purchase price and the landed cost can be 20-40% for imported goods.
Accurate landed cost allocation is important for two reasons: inventory valuation and margin analysis. If you sell a product for Rs 1,000 and your Zoho Books shows the cost as Rs 600 (only the purchase price), your gross margin appears to be 40% when the true margin, including freight and duty, might be 18%.
NetSuite and Zoho Inventory both support landed cost allocation. You create a landed cost record, enter the charges (freight, duty, handling), and allocate them across the items on the purchase using a chosen method: by quantity, by value, or by weight. The allocated cost is added to each item's inventory valuation.
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