Glossary
Landed cost
Landed cost is what a unit of stock cost by the time it reached your shelf, including freight, duty and handling.
The invoice price is only part of it. Everything after that is what makes the margin real.
What goes into it
- The unit price on the purchase order
- Freight, split across the units in the shipment
- Duty and import charges
- Currency costs, if you paid in another one
- Insurance and any handling fee
Split the shared costs by value rather than by unit count. A pallet of coats and a box of socks did not use the same share of the freight bill.
Why the gap bites
A jacket invoiced at £22 can land at £27 once air freight and duty are in. Priced at £45, that is 51% margin on the invoice and 40% on reality.
Eleven points is the difference between a product worth reordering and one that is quietly funding your courier.
Where it goes wrong
Freight gets treated as an overhead instead of a stock cost. It goes in one monthly total, never touches the product record, and every margin report you run is optimistic by whatever the shipping cost.
The other one is stale figures. Costs move, and a landed cost worked out eighteen months ago describes a shipment nobody remembers. Recheck it when a line’s inventory turnover drops, before you write the stock off as dead stock.
Related terms
Purchase order
Also called: PO
A purchase order is the document you send a supplier to order stock. It lists what you want, how many, and what you agreed to pay.
Inventory turnover
Also called: Stock turn
Inventory turnover is how many times you sell and replace your stock in a year. Higher means your money is working harder.
Dead stock
Also called: Obsolete stock
Dead stock is inventory that is not selling and is not going to, tying up money and shelf space you need for something else.