The Procurement Glossary » Landed Cost

Landed Cost

Inventory & Logistics

Definition

The total cost of a product delivered to the buyer's door, including price, freight, insurance, duties and handling.

Explanation

Landed cost reveals the true cost of imported goods, which a low unit price can hide once freight and duties are added. Comparing suppliers on landed cost (a form of TCO) prevents nasty surprises in cross-border sourcing.

Example

A cheaper overseas supplier loses on landed cost once freight and 10% duty are added.

Related terms

• Freight — The transport of goods and the charge for that transport.
• Incoterms — Standard international trade terms defining who is responsible for shipping, insurance, duties and risk at each point of a delivery.
• Customs Duty — A tax levied by a government on goods imported across its borders.
• Total Cost of Ownership (TCO) — The full lifetime cost of a purchase — not just the price, but delivery, installation, operation, maintenance, downtime and disposal.

Frequently Asked Questions

What is Landed Cost?

The total cost of a product delivered to the buyer's door, including price, freight, insurance, duties and handling. Landed cost reveals the true cost of imported goods, which a low unit price can hide once freight and duties are added. Comparing suppliers on landed cost (a form of TCO) prevents nasty surprises in cross-border sourcing.

Can you give an example of Landed Cost?

A cheaper overseas supplier loses on landed cost once freight and 10% duty are added.

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