The Landed Cost for a product is how much each unit of the product costs you including the cost for shipping from the manufacturer into Amazon or your warehouse, examples of costs to include:
- The cost of the product
- The cost of the packaging
- The cost of any inspections
- Freight Costs
- Label costs
Do not include costs like your office rent, or software costs. Only include costs directly related to the product and shipping the product to make it ready for sale.
Lets say I ordered 1000 units of a product.
Each unit of the product alone cost me $8.80. The gift box cost me $1.00 and adding a label at the factory cost me $0.20
Shipping to Amazon for all 1000 units was $2000 from the factory in China to the FBA Warehouse including all duties and fees.
So what is my Landed Cost?
UNIT LANDED COST = TOTAL COST / NUMBER OF UNITS
1000 Units x $8.80 Per Unit for the Product = $8,800.00
1000 Units x $1.00 Per Unit for the Gift Box = $1,000.00
1000 Units x $0.20 Per Unit for the Label = $200.00
Freight Cost for all 1000 Units = $2,000.00
TOTAL COST = $12,000.00
LANDED COST PER UNIT = $12,000.00 / 1000 UNITS = $12.00 Per Unit
How do I update my Landed Cost / COGs / Cost of Goods?