Supply Chain

Landed Cost

The factory quote is not your cost — a $4 unit routinely lands at $7, and every margin, price, and ad decision built on the wrong number inherits the error.

  • Beginner
  • 6 min total
  • 10 chapters

What decision this helps you make: Your true landed cost per SKU — and which decisions (pricing, ads, SKU selection) are currently running on the factory number instead.

What this topic is

Landed cost is the full per-unit cost of a product ready to sell: factory price plus freight, duties, insurance, brokerage, and inbound handling — the real number under every margin calculation.

Why it matters

The factory quote systematically understates cost, often by half or more — and pricing, ad bids, and SKU decisions built on it are built on fiction. Per-SKU landed cost is the supply-chain category's foundation stone.

Who should learn it

Anyone importing, wholesaling, or selling physical products — this number is the category's prerequisite.

What you will understand

  • The full stack: factory price, freight, duties, insurance, brokerage, handling
  • Why per-SKU allocation matters: averages hide the loser SKUs
  • The recomputation triggers: freight seasons, tariff moves, currency pass-through
  • Landed cost as the universal basis: pricing, margins, ad bids, SKU cuts

Prerequisites

Common misconception

"My cost is what the factory charges." The factory (FOB) price is where your cost STARTS: freight, duties, insurance, brokerage, and handling stack on top — commonly adding 50–100% on heavy, bulky, or high-duty goods. Sellers who price and bid ads off the factory number discover the difference as a business that grows revenue while losing money on every "profitable" sale.