How to calculate your landed cost per unit | Finaloop Help Center
How to calculate your landed cost per unit
This article explains landed costs for both sales based COGS and InventoryIQ.
Written by Emily Burrows
September 4, 2024
1. About
This article describes how to calculate the landed cost for both the sales based inventory method and InventoryIQ. If you want a refresher on these methods, head over to the article How to choose your COGS tracking method in Finaloop.
2. Which costs are part of landed costs?
So here’s the list.
| Cost items | Included | Excluded |
| Direct net unit cost of inventory purchases Direct purchases of ready-for-sale items (finished goods or finished products) Raw materials, if relevant |
✔ | |
| Estimated manufacturing / assembly costs Direct and indirect labor Contract manufacturers Manufacturing overhead |
✔ | |
| Indirect costs to get items to your warehouse Shipping-in Vendor fees Duties and tax Custom fees and services Insurance Allocated production costs Pallet costs Shipping surcharge Vendor discounts Other inventory indirect costs |
✔ | |
| Product-related packaging per unit (for example, the jars needed for selling jam) Generally a bulk cost divided by the unit quantity per product |
✔ | |
| Indirect costs after product is in the warehouse Shipping costs to customers (e.g. USPS, UPS) Warehouse fees Payments processing fees Marketing costs |
✔ | |
| Packaging for delivery to the customer (for example, bubble wrap) | ✔ |
3. Landed costs using sales based COGS
For sales based COGS, you’ll need to track the average landed cost per unit, which includes the direct and indirect costs per unit listed above. These costs become COGS in the P&L when products are actually sold.
- If you update these average landed costs per unit in Shopify, we’ll sync this data to Finaloop automatically.
- For other sales channels, you have several choices of how to best track these costs:
- You can manually add these costs for each SKU.
- Bulk upload these costs through a CSV.
- Merge these products with Shopify products that have the same costs to automatically keep these costs updated, as we sync the new data from Shopify, or
- Enter the total COGS on a per channel basis as a total dollar value rather than a cost per unit.
If you are using an external inventory management system that tracks your landed costs, you can use the data from there to input into Finaloop. If not, we recommend checking out InventoryIQ to automatically calculate your landed costs.
To get the specific workflow steps to add average costs either individually or in bulk, head over to the section How to track your sales based COGS in the article Sales based COGS: Everything you need to know.
4. Landed costs using InventoryIQ
With InventoryIQ, Finaloop calculates the landed cost (direct and related indirect costs per unit) for each SKU automatically. Nice!
When you create a PO, you’ll add the direct costs per unit, add your discounts and total indirect costs, and Finaloop automatically creates your real-time landed costs.
For more, head over to Managing your POs in Finaloop.