Landed cost calculator for purchased and imported goods

Landed cost is what an item really cost you once it reached your shop, godown or workshop: the price you paid plus its share of freight and the other charges of bringing it in. The calculator works it out for one purchase at a time.

The landed cost formula is: landed cost per unit = (quantity × unit price + the line's share of charges) ÷ quantity. The only real choice is how to split the charges between lines.

By value suits most purchases. An expensive item carries more of the charges than a cheap one, and every line rises by the same percentage: total charges ÷ total value of the purchase.

By quantity suits a purchase of similar items at similar prices, such as one product in several sizes or flavours, where each unit takes about the same space. Used on a mixed purchase, it loads cheap items with too much cost and makes them look less profitable than they are.

A kitchenware distributor buying from Rajkot. An Indore distributor buys 60 pressure cookers at ₹1,000 (₹60,000) and 100 steel bottles at ₹400 (₹40,000), a total of ₹1,00,000 before GST. Freight is ₹4,000 and unloading is ₹1,000, so the charges are ₹5,000, or 5% of the value.

By value, the cookers take ₹3,000 and land at ₹1,050 each, and the bottles take ₹2,000 and land at ₹420 each: both 5% above their purchase price. By quantity, the ₹5,000 is spread over 160 units at ₹31.25 each, so the cookers land at ₹1,031.25 (3.1% more) and the bottles at ₹431.25 (7.8% more). The total is ₹1,05,000 either way; only the split changes.

An importer of phone accessories. A Mumbai seller imports 500 power banks at ₹600 each (₹3,00,000) and 1,000 cables at ₹60 each (₹60,000). The charges are ₹21,000 freight (sea freight, insurance and the truck from the port), ₹2,000 for loading and unloading, and ₹43,000 other (₹36,000 basic customs duty plus ₹7,000 for the clearing agent), a total of ₹66,000. By value, that is 18.3% of the goods: the power banks land at ₹710 each and the cables at ₹71.

Include every cost of getting the goods to where you will sell or use them: freight, courier, hamali or loading and unloading, packing, insurance in transit and, for imports, basic customs duty and clearing charges.

Leave out GST you can claim back. For a regular GST-registered business, the GST on the supplier's bill and on the freight bill is normally claimed as input tax credit, so it is not part of what the goods cost. The same goes for IGST paid at customs on imports, while basic customs duty cannot be claimed back and belongs in landed cost. If your business is under the composition scheme or cannot claim the credit, the GST is part of your cost; ask your accountant.

This calculator treats customs duty as one of the extra charges and spreads it with the rest. Duty is really charged item by item, at each item's own rate, so if your products carry different duty rates, add each item's duty from the bill of entry to its unit price and keep only the shared charges, such as freight, as extra charges.

These mistakes leave you pricing from a cost that is too high or too low.

Working out landed cost once is easy. Keeping it in your stock value and margins is harder: every purchase brings new charges, the same product arrives at different costs, and a freight bill that comes late means fixing figures you have already used.

managemate does this on the purchase order. Add named extra costs, such as freight, packing or loading, each with its own tax rate and an amount before tax. They are spread across the order's lines by value, after line discounts and before GST, which is this calculator's default method; managemate does not offer a split by quantity. Received stock enters its lot at the landed cost, and each lot keeps a moving-average cost, so stock value and margins include freight. Charges can be edited until the supplier's bill is recorded, a payment is made or goods are returned, and stock still on hand is revalued, while units already sold keep the cost they left at. Orders in another currency are converted at the exchange rate saved on the order.