Product Landed Cost Calculator
What is Product Landing cost?
Product Landing Cost, also known as Landed Cost or Total Landed Cost, refers to the total cost incurred by a business to bring a product from the manufacturer or supplier to its final destination, ready for sale or use. Product landed cost calculator help to manage the cost and its details. This cost includes not only the production or manufacturing expenses but also various additional costs associated with transportation costs, import duties, customs, handling, and other related activities with exchange rate and currency conversion differences.
These cost calculation helps to arrive at product unit costs thats landed at your factory. One good advantage is, this process helps to define the real profit margins of a Sold item. So its important to do a landed cost analysis and arrive at the right price.
Understanding the product total cost is essential for businesses to determine the true cost of their products and make informed pricing and sourcing decisions.
ACTouch Cloud ERP Software helps with a 100% accuracy in Landed Cost Calculation and an ability to capture all these details.
Elements of Product Landing Cost
Below are the elements that are considered to arrive at Product Landing Cost. Based on the business vertical, you use what’s needed. All may not be needed for your business.
Manufacturing Cost: This is the direct cost of producing or manufacturing the product. It includes the cost of raw materials, labor, and manufacturing overheads. Need to find the many hidden costs that are not visible unless, we look for them to find the actual costs.
Shipping and Freight Costs: These costs cover the transportation expenses to move the product from the manufacturer or supplier to the business’s location or distribution center. It includes freight charges, shipping fees, and logistics expenses.
Customs Duties and Tariffs: If the product is imported from another country, import fees, customs duties and tariffs are levied by the importing country’s government. These charges are included in the product costs.
Insurance Costs: Businesses often insure their products during transportation to protect against damage or loss. Insurance premiums are considered as part this. So insurance charges to be considered to this.
Handling and Warehousing Costs: These costs cover the expenses related to handling, storing, and managing the product in warehouses or distribution centers before it is sold.
Taxes and Duties: Apart from customs duties, there might be other taxes and duties, such as local taxes or excise duties, which are included.
Currency Exchange and Financing Costs: If transactions involve different currencies or financing arrangements, currency exchange fees and financing costs may be factored into the landing cost.
Compliance and Regulatory Costs: Some products may require compliance with specific regulations or certifications, which may add to the landing cost.
Quality Control and Inspection Costs: If the product requires quality control checks or inspections during transportation or before sale, these costs are also considered.
Packaging Costs: The cost of packaging materials and packaging labor to prepare the product for shipment is part of the landing cost.
Returns and Reverse Logistics: In case of returns or product recalls, the cost of managing reverse logistics is also factored into the landing cost.
Understanding the various elements of product allows businesses to have a more comprehensive view of the true cost of their products. It helps in setting competitive prices that cover all associated expenses and ensures profitability. Additionally, analyzing the product landing cost aids businesses in identifying opportunities for cost optimization, supply chain improvements, and better sourcing decisions.
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Product Landed Cost Calculator and how to use it?
This calculator includes the following cost elements:
- Manufacturing Cost per Unit: The cost incurred to produce one unit of the product.
- Shipping Cost per Unit: The cost associated with transporting one unit of the product from the manufacturer to the seller’s location.
- Customs Duty per Unit: The duty or tax paid on imported products.
- Marketing Cost per Unit: The cost of marketing activities to promote the product.
- Other Costs per Unit: Any additional costs not covered by the above categories.
Users can input the values for each cost element and click the “Calculate Landing Cost” button to get the total product landing cost per unit.