Landed Cost

Landed cost is the total cost of a product after all expenses required to bring it to its destination are included — raw material price, inbound freight, customs duties, import fees, co-packer handling charges, and any other costs incurred before the product is in your warehouse and available for production. For food brands sourcing ingredients internationally, landed cost can be significantly higher than the invoice price alone.

Why Landed Cost Matters for COGS

Cost of Goods Sold (COGS) is only accurate if it reflects the true cost of the inputs used to produce finished goods. A food brand that calculates COGS using only the supplier invoice price — without freight, duties, and handling — will systematically understate its cost of goods and overstate its margins.

This is particularly significant for organic CPG brands sourcing certified organic ingredients internationally, where freight and import costs can add 15–30% to the invoice price of raw materials.

Components of Landed Cost

• Supplier invoice price — the agreed per-unit cost of the raw material
• Inbound freight — ocean, air, or ground shipping from supplier to warehouse
• Customs duties and tariffs — import taxes assessed at the border
• Customs brokerage fees — third-party fees for import clearance
• Port handling and drayage — costs to move goods from port to warehouse
• Insurance — cargo insurance during transit

In a connected operations platform, landed cost is calculated at the purchase order level and flows automatically into COGS when raw materials are consumed in production.