The landed cost refers to the price of a product to subsidiary/distributor when it arrives at the point of entry to their distribution territory. The landed cost price is also used for determining the cost of sales and sales price of the subsidiary/distributor.
The ability to source products from around the world offers businesses opportunities to reduce costs and increase product availability, potentially resulting in strategic and profitability gains. However, the opportunity also brings the challenge of accurately calculating true cost and profitability analysis.
Landed cost is the process of capturing all costs associated with the acquisition of goods, enabling businesses to accurately calculate inventory valuation by including these associated costs, whether the costs are known at the time of receipt of the goods, or sometime after.