# Landed cost overview

## Overview

Find out what landed costs are, how they're calculated, and how to track your landed costs correctly.

A *landed cost* is the total cost of a unit of product. It includes the cost of the unit and any additional costs of purchasing, such as freight, insurance, customs duties, and so on.

For example, take this purchase order:

1 unit

$100.00 per unit

$10.00 customs duties

$5.00 freight

The landed cost of that unit will equal $115.00. If the purchase order were for 2 units with no change to cost per unit, customs duties, or freight, the landed cost of each unit would equal $107.50.

## Landed costs and gross profit

Gross profit is one of your most important indicators of financial performance. To calculate your gross profit, you subtract your cost of goods sold (COGS) from your revenue. And to calculate your COGS, you add together the landed cost of each unit you sell.

## Calculating landed costs

To calculate a unit's landed cost, Cin7 Omni firsts calculates the unit cost:

the

**Sub Total**of the line item / the**Qty Received**of the line item

Next Omni calculates the unit's share of additional purchasing costs paid to the supplier:

(

**Freight**+**Surcharge**-**Discount**) / the total**Qty Ordered**of all line items

Then it calculates the unit's share of additional purchasing costs paid to third parties:

total

**Amt**of all additional purchasing costs paid to third parties x the unit's share of the total**Value**or**Weight**or**Cubic Meter**of the purchase order

Finally, to give the landed cost of the unit, Omni adds these together:

unit cost + additional purchasing costs (supplier) + additional purchasing costs (third party) = landed cost

## Additional purchasing costs (third party)

Additional purchasing costs paid to third parties (otherwise known as additional landing costs) are added, edited, and deleted in the **Landed Costs** section on the purchase order.

Additional purchasing costs can be distributed to units in the purchase order by value, weight, or cubic meter. They can also be categorized, so that when they're synced to Xero or QuickBooks Online, they credit different expense accounts.

Find out how to categorize additional purchasing costs and how to apply and distribute additional purchasing costs.

## Reviewing landed costs

To see the combined landed costs of a purchase order, open the purchase order, select **Go To Admin**, and then select **Report**. To see the landed cost of a particular unit, use the Stock On Hand Reconciliation report.