Landed cost
Landed cost is the full cost of getting goods into your shop or godown, including the purchase price, freight, loading and any duties.
Landed cost is everything you pay to get goods onto your shelf. Besides the supplier's price, it includes freight, loading and unloading, labour, transport from the adda to the godown, and for imported goods, customs duty and clearing charges.
Example
| Cost | Amount |
|---|---|
| 100 cartons at Rs 2,000 each | Rs 200,000 |
| Truck freight from Lahore | Rs 12,000 |
| Loading and unloading labour | Rs 3,000 |
| Total landed cost | Rs 215,000 |
| Landed cost per carton | Rs 2,150 |
A trader in Bahawalpur prices these cartons at Rs 2,300, thinking he makes Rs 300 on each. His real profit is 2,300 − 2,150 = Rs 150 per carton, half what he believed. Across 100 cartons, that is Rs 15,000 of profit that existed only on paper.
Why it matters
- Prices set on the supplier's rate alone overstate margin, especially for heavy or bulky goods.
- Comparing suppliers fairly means comparing landed costs: a cheaper supplier further away may cost more in the end.
- Stock valuation is more accurate when freight is included.
How software handles it
The simplest approach is to add freight and labour into the purchase cost when you record the purchase, spreading it across the items in that delivery. Expenses that cannot be tied to a specific delivery are better recorded as general expenses. Either way, keeping these costs on record is what lets you check your real gross margin. Taajir handles landed cost on purchases, so freight and similar charges can be added to the cost of the goods they came with.
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