Landed cost calculator for Shopify products

The answer

True cost per unit

–

Goods value

–

Total landed cost

–

On top of the invoice price

– %

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The formula

Landed cost spreads every charge on the shipment across the units in it.

landed cost per unit = (goods + duty + freight + fees) ÷ units

Duty is charged on the goods value. Freight and fees are charged on the shipment. Both get divided by the number of units, which is why ordering more per shipment brings the per unit cost down.

A worked example

You buy 500 units at four pounds each. The goods are worth 2,000. Duty at five percent adds 100. Freight is 300 and customs handling is 50.

The total is 2,450. Divided by 500 units, each one costs 4.90.

That is 22.5 percent more than the invoice said. On a product you sell at nine, the difference between costing four and costing 4.90 is a fifth of your profit.

What a good number looks like

There is no target here, only an honest one. What matters is whether the number in Shopify’s cost per item field is this one or the invoice one.

An uplift under ten percent is small enough to round into your pricing. Over twenty percent and it has to be priced for. A container of light, cheap goods can easily land at forty percent over, and that is the case where using the invoice price quietly turns a profitable line into a loss.

Where this goes next

Once you have the true cost, put it through the margin calculator with your selling price and the payment fee. That is the number that tells you whether the product is worth stocking.

Record the freight split on the order itself while you still remember it. The purchase order template has a line for it, so the figure is on the paperwork rather than in somebody’s inbox.

Questions people ask

What is landed cost?

It is what a unit costs by the time it is on your shelf and ready to sell. The invoice price is only part of it. Freight, duty and handling all have to be spread over the units in the shipment.

Why does this matter for Shopify?

Shopify has one cost per item field. If you put the invoice price in it, every margin report you run is wrong by whatever freight and duty came to.

Is duty charged on freight too?

It depends on the terms and the country. This tool charges duty on the goods value, which is the common case. If your customs paperwork says otherwise, add the difference into other fees.

How do I split freight across mixed products?

By value is the usual method and the easiest to defend. Split the freight bill in proportion to what each line cost, then run each line through here separately.

What is a normal uplift?

For a container from Asia it is often fifteen to thirty percent. For a domestic pallet it can be under five. If yours is over twenty, your pricing needs to know about it.

Landed cost calculator

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