How to Automatically Calculate Landed Costs

Do you know precisely how much it costs to order new parts, products, and materials? You need to look beyond the initial price tag and dig deeper to discover what is known as the Landed Cost or True Cost of each item.

Landed Costs are calculated by adding up all the costs that go into getting products from one location to another. These costs can be separated into four categories. Let’s go through each one:

Landed costs, Fishbowl Inventory BlogTaxes
Customs

Tariffs
Duties
Harbor fees
Currency conversion

Shipping Costs
Crating

Packing
Freight
Handling

Operating Expenses
Employee compensation
Due diligence
Brokerage and logistical fees

Risk Management
Insurance
Regulation compliance
Quality checks
Buffer stock

Once you add up all of these costs, then you’ll see the final price you’ll pay. Of course, not every product you order will have all of these built into it. These are all of the possible taxes and fees that can go into each order you make. It’s important to be aware of all of them and also know when they apply and how to calculate them.

Fishbowl Inventory can handle the heavy lifting for you when it comes to calculating Landed Costs. When you place orders, Fishbowl Inventory automatically distributes the vendors’ costs (e.g., taxes, shipping costs, and tariffs) across the items in the order to give you more accurate costing on your products. By knowing what your final cost will be, you can decide if each purchase is absolutely worth it and if you’re getting the best deal.

Sign up for an inventory software demo to start enjoying this and many other advanced order management features.

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About Robert Lockard

Robert Lockard is a copywriter with Fishbowl. He writes for several blogs about inventory management, manufacturing, QuickBooks and small business. Fishbowl is the #1-requested manufacturing and warehouse management software for QuickBooks users. Robert enjoys running, reading, writing, spending time with his wife and children, and watching movies.
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One Response to How to Automatically Calculate Landed Costs

  1. Pingback: Whiteboard Wednesday: How to Calculate the True Cost of Goods | Fishbowl Inventory Blog

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