---
title: "What is landed cost? Definition and what it includes"
description: "Landed cost is the supplier unit price plus freight, duties, prep, inbound shipping and payment fees, divided by the units actually received into stock."
question: "What is landed cost?"
cluster: glossary
published: 2026-08-19
updated: 2026-08-19
tags: [landed-cost, cost-basis, freight, unit-economics]
related: [landed-cost-for-amazon-wholesale, what-is-cogs, allocate-freight-across-po-lines, amazon-fba-fee-breakdown]
---

Landed cost is the total per-unit cost of moving a product from the supplier's dock into your selling channel, divided by the units actually received rather than the units ordered.

Landed cost, not unit price, is the number that decides whether a wholesale deal is real. On low-priced goods the two are far enough apart to flip a deal from profitable to loss-making without a single figure on the invoice changing.

## What landed cost includes

Landed cost includes every cost incurred to take ownership of a unit and put it in sellable condition at its destination, and stops at the destination door. Six components cover almost every wholesale purchase.

Unit price after price-break tiers and account discounts. Inbound freight from the supplier, including accessorials and fuel surcharges. Duties, customs brokerage and tariff charges on imported goods. Prep — poly bags, labels, bundling, whether done in-house or by a prep center. Inbound shipping from your location to the fulfillment center. And the cost of paying the supplier — a card surcharge or wire fee in one direction, an early-payment discount in the other.

The denominator matters as much as the numerator. Landed cost divides by units received, so a short shipment or a damaged carton raises landed cost on every surviving unit without any invoice being wrong.

## Landed cost versus unit price

Landed cost always exceeds unit price, and the gap between them widens sharply as unit price falls. The reason is structural: most landed-cost add-ons are fixed per unit, so they consume a fixed number of cents regardless of what the unit costs.

**Table: landed cost multiplier at four unit prices, fixed add-ons of $1.55 plus a 2.5% card surcharge, August 2026**

| Supplier unit price | Add-ons per unit | Landed cost | Multiplier | Increase over unit price |
|---|---|---|---|---|
| $3.10 | $1.63 | $4.73 | 1.53x | 52.6% |
| $8.00 | $1.75 | $9.75 | 1.22x | 21.9% |
| $18.00 | $2.00 | $20.00 | 1.11x | 11.1% |
| $45.00 | $2.68 | $47.68 | 1.06x | 6.0% |

The $1.55 of freight, prep and inbound shipping is identical on all four rows: half the cost of the cheap unit and 3.4% of the expensive one. Cheap units therefore need a much larger percentage margin at invoice price to survive, and a supplier list sorted by ROI computed on unit price alone puts the worst deals at the top.

## A worked example where landed cost is half again the unit price

Landed cost on a cheap unit can run half again above the invoice price, and a worked case shows how a healthy-looking margin disappears. The unit below is invoiced at $3.10 and sells on Amazon at $9.99.

**Table: landed cost and net proceeds on a low-price wholesale unit, August 2026**

| Line | Amount |
|---|---|
| Supplier unit price | $3.10 |
| Inbound freight, allocated | $0.62 |
| Prep, poly bag and label | $0.40 |
| Inbound shipping to Amazon | $0.53 |
| Card surcharge at 2.5% | $0.08 |
| Landed cost | $4.73 |
| Sale price | $9.99 |
| Referral fee at 15% | minus $1.50 |
| Assumed FBA fulfillment fee | minus $3.86 |
| Net proceeds | $4.63 |
| Profit per unit | minus $0.10 |

Priced on the invoice alone, this SKU reports 49.4% ROI and looks like an easy buy. Priced on landed cost, it loses ten cents a unit. Referral fees run 5% to 45% by category with a typical $0.30 per-item minimum; Amazon does not publish FBA fulfillment fee tables on its public pricing page and routes sellers to Seller Central for them (sell.amazon.com/pricing, checked 2026-08-03), so the fulfillment fee above is an assumption. Pull the real figure per ASIN rather than assuming a tier, as [the Amazon FBA fee breakdown](/docs/amazon-fba-fee-breakdown) explains.

## Landed cost versus COGS

Landed cost and cost of goods sold hold the same dollars at different moments. Landed cost is set when goods are received and applies to every unit in stock; cost of goods sold recognizes that per-unit figure only when a unit sells, and only for the units that sold.

Landed cost is a buying number and COGS is a reporting number. A buyer uses landed cost to accept or reject a purchase order before any of it has sold. An accountant uses COGS to state what the sold units cost, which requires a cost-flow choice — first in first out, or weighted average — once two shipments of the same SKU arrive at different landed costs. [What COGS means for an Amazon seller](/docs/what-is-cogs) covers the reporting side, and [how to allocate freight across purchase order lines](/docs/allocate-freight-across-po-lines) covers the hardest input on the buying side.

## Landed cost and the profitability floor

Landed cost is what a return threshold has to be measured against, or the threshold measures nothing. Forge Command applies a hard floor of 10% net ROI after Amazon fees and $1,000 a month of ASIN revenue before an opportunity is surfaced at all, and both filters run on margin math from a single shared calculation so the ROI on a catalog row, a product record and a purchase order cannot disagree.

The 10% floor only holds if the cost side is complete. Forge Command computes landed cost on the purchase order, alongside freight allocation, and pulls Amazon fee data through the tenant's own SP-API credentials in batches of 20 identifiers per request. The honest limit: those credentials are a setup step, and until they are connected the fee half of the calculation is empty. Keepa lookups, which add sales and buy-box data, spend the tenant's own paid tokens and are opt-in. The full component-by-component workflow is in [how to calculate landed cost for Amazon wholesale](/docs/landed-cost-for-amazon-wholesale).

## Frequently asked questions

### Is landed cost the same as cost per unit

Only if the unit price is the sole cost, which is almost never true in wholesale. Cost per unit as printed on a supplier invoice excludes freight, prep, inbound shipping and payment costs. On the illustration above, those add-ons range from 6% of unit price to more than half of it.

### Does landed cost include Amazon fees

No. Landed cost ends when the unit is in a fulfillment center. Referral fees, fulfillment fees and storage are charged against the sale, so putting them into landed cost double-counts them and produces a cost basis that will not tie back to supplier invoices.

### How do I handle freight that is invoiced weeks later

Receive the goods at an estimated freight rate and correct the landed cost when the carrier invoice lands, keeping the estimate and the actual as separate values. The variance tells you whether the estimate is worth trusting on the next purchase order.

### Should duties be in landed cost for domestic distributors

Duties are zero when buying from a domestic distributor, because the distributor already paid them and they sit inside the unit price. Keep the line in the calculation at zero anyway, so the first imported purchase order does not silently omit a real cost.