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Calculating and updating landing cost
Calculating and updating landing cost
Monica avatar
Written by Monica
Updated over a week ago

The landing cost price of a product is the total unit cost of a variant, including cost price and related expenses. In addition to the cost being charged by the vendor, it can include shipping and handling and discounts. Landing cost is the cost price in addition to extra expenses - not only the extra expenses.

Note: Landing cost does not include VAT or tax.

Note: The landing cost price may be used instead of the cost price to calculate some metrics. Learn more in our Glossary of Terms.

Examples

Purchase order with a single item, a shipping and handling charge, and no discounts

Take the example of this purchase order for 20 units of one item. The line item is $1 per unit, and the shipping and handling charge is $8.

In this example, the landing cost is calculated by:

  • Working out the shipping cost per unit of currency,

    • Shipping and handling charge / total cost of all non-shipping line items excluding tax = shipping cost per unit of currency

  • Multiplying it by the unit cost to work out the total shipping cost per product,

    • Cost price of one unit * shipping cost per unit of currency = total shipping cost per unit

  • Adding this to the product's unit cost to get total landing cost

    • Total shipping cost per unit + cost price of one unit = landing cost per unit

So:

  • Shipping cost per unit of currency = $8 (shipping and handling) / $20 (total of line items) = $0.40 per unit of currency

  • Total shipping cost per product = $0.40 (shipping per unit) * $1 (cost of one unit) = $0.40

  • Landing cost = $1 (cost of one unit) + $0.40 = $1.40

Purchase order with multiple items, discounts, and a shipping and handling charge

Take this example purchase order which has 50 units of Product A at $5 per unit and 40 units of Product B at $6 per unit. A discount of 10% is applied to both rows, and there is a shipping and handling charge of $22.05.

The calculation is similar to the previous example, except the cost price after discount is considered instead of the cost price.

So for Product A, landing cost is calculated as follows:

  • Shipping cost per unit of currency = $22.05 (shipping and handling) / $441 (total of line items after discount) = $0.05 per unit of currency

  • Total shipping cost per product = $0.05 (shipping per unit) * $4.50 (cost of one unit after discount) = $0.225

  • Landing cost = $4.50 (cost of one unit after discount) + $0.225 = $4.725

The landing cost of $4.725 then gets rounded to $4.73.

For Product B, landing cost is calculated as:

  • Total shipping cost per product = $0.05 (shipping per unit) * $5.40 = $0.27

  • Landing cost = $5.40 (cost of one unit after discount) + $0.27 = $5.67

Setting the landing cost

Landing cost can be set in the vendor attributes section of Inventory Planner:
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However, you can also set the landing cost based on the values provided in the most recently-received purchase order.
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There are two ways to do so, explained below.

โ€‹Note: If you do not use either of the methods mentioned below, the landing cost value will remain unchanged from the value as set in vendor attributes.

Method 1

When creating or editing the purchase order, use the option to "Update vendor attributes for line items variants", found next to the "Create" or "Save" button:

This will then push all details that are set on the purchase order back to the vendor attribute section.

To see the details that will be saved, hover over the ? icon.
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Method 2

Once the purchase order has been received, you can click "Actions" then "Update vendor attributes for line items variants" in the menu.


From here, you can choose what details you wish to push back to the vendor attributes:

Select "Landing cost price", then click "Apply".

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