How do you calculate landed cost per unit?

Add up all the costs of a shipment (goods, freight, duty, fees, insurance, prep), then allocate that total across the units in the shipment, typically by quantity, weight, or value. The result is each unit's landed cost, which then feeds your COGS when the unit sells.

What is the difference between landed cost and COGS?

Landed cost is the all-in cost of a unit sitting in your inventory. COGS is the landed cost of the units that actually sold during a period. Landed cost lives on the balance sheet as inventory until the unit sells, at which point it becomes COGS on the income statement.

Should I include tariffs and duties in landed cost?

Yes. Customs duties and tariffs are a direct cost of acquiring imported inventory and belong in landed cost. Because tariff rates can change between shipments, it's worth verifying the current rate per shipment so your unit costs stay accurate.

Why does landed cost matter for FBA reimbursements?

When Amazon loses or damages a unit, the true value of that loss is its landed cost, not the supplier price. Amazon's reimbursement estimate may not cover your full cost, so having accurate landed cost lets you check whether the payout actually made you whole.

Glossary

What is Landed cost?

The true per-unit cost of inventory: supplier price plus freight, duty, taxes, and prep.

Landed cost is the true, all-in per-unit cost of getting a product into your inventory and ready to sell. If you've wondered what landed cost means, the simplest definition is: the supplier's price plus every cost incurred to land that unit at the warehouse, including inbound freight, customs duties and tariffs, insurance, and any prep or labeling. It is the number that should drive your COGS, your inventory valuation, and your pricing, because it reflects what the unit actually cost you, not just what the invoice said.

Sellers who price off the supplier invoice alone consistently overestimate their margins, sometimes by enough to turn a "profitable" product into a loss. Freight and duty can add a meaningful slice to a unit's cost, and that slice varies by shipment, supplier, and route. Landed cost is the discipline of capturing all of it and dividing it down to the unit, so that every product-level profit decision starts from reality.

What does landed cost mean, and what goes into it?

Landed cost means the total cost to acquire a unit and bring it to a sellable state in your possession. It starts with the supplier price on your purchase order, then adds every cost between the factory and your shelf. The most reliable way to build it is to total the costs of a shipment and allocate them across the units in that shipment, usually by quantity, weight, or value, so each unit absorbs its fair share.

The components are predictable even if the amounts change shipment to shipment. The point is that none of these are optional add-ons. They are part of what the unit cost you, and excluding any of them understates your COGS and overstates your margin. Tariffs in particular have become a moving target for importers, so re-checking duty rates per shipment is no longer something you can skip.

•Supplier/manufacturer unit price (from the PO)
•Inbound freight (ocean, air, or ground to your destination)
•Customs duties and tariffs
•Import taxes, brokerage, and clearance fees
•Insurance on the shipment
•Prep, labeling (FNSKU), bundling, and inspection

Landed cost vs supplier cost vs COGS

Supplier cost is just the price you paid the factory. Landed cost is that price plus everything it took to get the goods to you. COGS is the landed cost of the units that actually sold in a period. These three are often confused, but the relationship is a clean chain: supplier cost is one input to landed cost, and landed cost is what flows into COGS when a unit sells.

The reason this chain matters is that errors compound downstream. If your landed cost is wrong, your inventory on the balance sheet is mis-valued, your COGS is wrong, your gross margin is wrong, and any reimbursement you receive for a lost unit can't be checked against a correct cost. Building landed cost once, accurately, and carrying it through to COGS is the foundation of every reliable margin number you'll ever produce.

Why landed cost is the backbone of margin and reimbursement accuracy

Pricing and product selection both depend on landed cost. When you evaluate whether an Amazon product is worth selling, you subtract landed cost and the platform fee stack from your price to find true net margin. Skip the freight and duty and the math lies to you. Landed cost is also what reveals when a product's economics break after a tariff increase or a freight spike, often before the bank balance makes it obvious.

Landed cost is equally central to FBA reimbursement recovery. When Amazon loses or damages a unit, the fair value of that loss is its landed cost, not the supplier invoice price. Amazon's reimbursement may be capped or based on its own estimate, so to know whether you've been made whole you need your real per-unit cost on hand. BeanHawk attaches landed cost to each unit so lost-inventory reimbursements can be valued and verified against what you actually paid.

Frequently asked questions

What does landed cost mean?: Landed cost means the total per-unit cost of getting a product into your inventory ready to sell: the supplier price plus inbound freight, duties and tariffs, import fees, insurance, and prep. It is the real cost of the unit, as opposed to just the supplier invoice price.
How do you calculate landed cost per unit?: Add up all the costs of a shipment (goods, freight, duty, fees, insurance, prep), then allocate that total across the units in the shipment, typically by quantity, weight, or value. The result is each unit's landed cost, which then feeds your COGS when the unit sells.
What is the difference between landed cost and COGS?: Landed cost is the all-in cost of a unit sitting in your inventory. COGS is the landed cost of the units that actually sold during a period. Landed cost lives on the balance sheet as inventory until the unit sells, at which point it becomes COGS on the income statement.
Should I include tariffs and duties in landed cost?: Yes. Customs duties and tariffs are a direct cost of acquiring imported inventory and belong in landed cost. Because tariff rates can change between shipments, it's worth verifying the current rate per shipment so your unit costs stay accurate.
Why does landed cost matter for FBA reimbursements?: When Amazon loses or damages a unit, the true value of that loss is its landed cost, not the supplier price. Amazon's reimbursement estimate may not cover your full cost, so having accurate landed cost lets you check whether the payout actually made you whole.

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