Landed cost calculator: the total landed cost of a shipment, and what each unit cost
Landed cost per unit = (units × price paid + the line's share of freight + its share of duty and fees) ÷ units. Split duty and customs fees by each line's value, because duty is charged on value. Split freight by weight when you know the weights, or by units when the items are alike. In the example below a $1,600.00 shipment with $180.00 of freight and $120.00 of duty and fees lands at $1,900.00, and a mug bought at $4.00 lands at $4.7965.
The calculator
One shipment at a time: freight and duty belong to the delivery they were paid for. Weight can be in any unit, as long as every line uses the same one.
Duty and fees are always split by value. Each share is rounded to the cent so the lines add back to the shipment exactly.
The formula
Line goods = units × price paid per unit
Freight share = freight × line basis ÷ total basis (weight, units or value)
Duty share = (duty + fees) × line value ÷ total value
Landed per unit = (line goods + freight share + duty share) ÷ unitsWhat goes into landed cost
Under IAS 2, the cost of goods bought for resale is the purchase price plus import duties and other taxes you can't get back, plus transport, handling and other costs directly needed to bring them in; trade discounts and rebates come off (IAS 2.11). The IRS also counts freight-in on merchandise bought for sale as part of cost of goods sold (IRS Publication 334).
| Cost | In landed cost? | Split by |
|---|---|---|
| Price paid to the supplier, after discounts | Yes | The line itself |
| Inbound freight and insurance | Yes | Weight, or units when items are alike |
| Import duty | Yes | Value |
| Customs brokerage and port fees | Yes | Value, or units |
| VAT or GST you can reclaim | No | — |
| Shipping orders to customers | No: a selling cost | — |
A worked example
| Product | Units | Price | Weight | Freight | Duty and fees | Landed per unit |
|---|---|---|---|---|---|---|
| Ceramic mug | 100 | $4.00 | 0.40 | $49.65 | $30.00 | $4.7965 |
| Teapot | 50 | $12.00 | 1.10 | $68.28 | $45.00 | $14.2656 |
| Serving tray | 20 | $30.00 | 2.50 | $62.07 | $45.00 | $35.3535 |
| Shipment | 170 | $1,600.00 | 145 | $180.00 | $120.00 | $1,900.00 |
The basis matters. Split by units instead of weight, the same freight puts the mug at $5.3588 and the tray at $33.3090: the light mugs would carry freight that the heavy trays caused.
Where Shopify stops
Shopify lets you record shipping and customs duties as cost adjustments on a purchase order's transfer (what they do), but Cost per item does not move: “This cost stays fixed when you receive a purchase order or transfer.” For landed cost allocation, Shopify Help points to a third-party inventory app (Shopify Help). So the figure from this calculator has to be typed into Cost per item, and averaged with the stock you already hold.
How True COGS does it
- On paid plans, each shipment's freight is split by units, weight or value, as you choose, and duty and fees by value, to the micro.
- The split is written beside each unit's cost, so the history reconciles to the invoice.
- The landed cost is then averaged with the stock you hold (or kept as a FIFO layer) and written to Shopify's Cost per item.
Related guides
Questions merchants ask
How do you calculate landed cost per unit?
Add the line's goods cost, its share of freight and its share of duty and fees, then divide by the units. Split freight by weight or units, and duty by value.
Is landed cost the same as COGS?
No. Landed cost is what a unit in stock cost you. Cost of goods sold is the landed cost of the units you sold in a period.
Should VAT or GST be in landed cost?
Only if you can't reclaim it. IAS 2 counts import duties and other taxes in the cost of inventory except those you later recover.
Should freight be split by weight or by value?
By weight when the carrier charged by weight and you know each item's weight; by units when the items are alike. Duty is charged on value, so split it by value.
Does Shopify calculate landed cost?
No. You can record shipping and customs duties on a transfer, but Cost per item stays fixed when you receive. Shopify Help points to a third-party app for landed cost allocation.
What is total landed cost?
The full cost of a shipment once it reaches you: the supplier price after discounts, plus inbound freight and insurance, import duty, taxes you cannot reclaim, and customs brokerage and port fees. Share it across the units by weight, units or value to get each unit's landed cost.
Try True COGS free. True COGS is an inventory costing app for Shopify by Nexus Logic Systems. It records the price you paid on every delivery (a received purchase order or a transfer), with its share of freight and duty on paid plans, keeps every price with its date, and writes your moving weighted average cost, or FIFO cost on a paid plan, to Shopify's Cost per item. It is free for up to 25 variants with a cost on record; paid plans start at $29 a month or $290 a year.
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