Landed Cost
Part of Sourcing costs and landed cost
Calculating landed cost beyond the unit price
Build an Australian landed-cost worksheet, avoid double counting and calculate cost per usable unit with tax assumptions kept clear.
For a commercial landed-cost estimate, choose where the goods must arrive, add the costs needed to get the order there and divide the assigned total by expected usable units. Use the same boundary for competing offers. Show import GST payments separately until their treatment for your business is confirmed.
The landed-cost method at a glance
- Set the boundaryChoose the receiving point in Australia where the goods must arrive, and fix the delivery term and named place.
- Fill the worksheetAdd goods, packing, freight, insurance, import charges, clearance, local delivery, checks and one-off fees without double counting.
- Divide by usable unitsDivide the assigned commercial total by expected usable units, then recalculate from the accepted count after arrival.
- Reconcile after arrivalReplace estimates with invoices and assessments, and keep GST on a separate cash line pending confirmation.
Define the boundary and denominator
A practical boundary is accepted stock at your Australian receiving point. Record the product specification, order quantity, currency, delivery term and named place. Check what the supplier's price already includes so freight or another service is not counted twice.
Units ordered, shipped and accepted can differ. Estimate using expected usable units; after arrival, recalculate from the accepted count and record replacement goods separately. If products share a shipment, document a sensible basis for allocating common costs, such as weight, volume or value. That choice can change each product's apparent margin.
Fill the cost worksheet
| Cost line | Question before entering an amount |
|---|---|
| Goods and packing | Does the unit price include the specified packaging and variants? |
| Freight and insurance | Which legs are included, and is insurance arranged or separately priced? |
| Import charges | What duty and declaration charges apply to these goods and this shipment? |
| Clearance and local delivery | What will the broker, carrier, depot or delivery provider charge? |
| Checks and corrections | Are inspection, testing, sorting or planned rework part of this order? |
| One-off fees | Are samples, tooling or setup payments assigned to this order or shown separately? |
Duty depends on the goods' tariff treatment; there is no percentage to insert into every estimate. Check applicable declaration charges for the actual shipment. Keep any GST estimate separate from this worksheet total until its treatment is confirmed.
A worked example
Suppose a hypothetical 500-unit order. The goods are priced at A$5,000, freight of A$700, insurance of A$50, broker service of A$200, assumed duty of A$250, assumed declaration-related charges of A$100 and local delivery of A$250. If none is included in another line, the commercial total at the receiving point is A$6,550, or A$13.10 per ordered unit.
If only 490 units are accepted and the total remains A$6,550, the figure becomes about A$13.37 per accepted unit. The duty and declaration amounts are fictional calculation inputs, not Australian rates or a shipment quote. GST is excluded from these figures and belongs on a separate cash line pending assessment.
Reconcile after arrival
Replace estimates with invoices and assessments. Check for a charge appearing on both a supplier and forwarder invoice. Explain differences between ordered, shipped and accepted units, and retain advised but uninvoiced fees as open lines. A per-unit figure is useful only alongside its receiving point, tax treatment and usable-unit assumption.
Reconciling your landed cost after the goods arrive
- Replace estimates with invoices and assessments
- Check no charge appears on both a supplier and a forwarder invoice
- Explain differences between ordered, shipped and accepted units
- Keep advised but uninvoiced fees as open lines
- Reissue the per-unit figure alongside its receiving point, tax treatment and usable-unit assumption
