Landed Costs Made Simple: A Guide for Amazon & Shopify Sellers

Running a successful eCommerce business means more than just driving sales — it means understanding your true costs. For Amazon FBA and Shopify sellers, one of the most overlooked and misunderstood metrics is the landed cost per unit.

If you’re relying on rough estimates, spreadsheet formulas, or simply averaging costs across SKUs, chances are your margins aren’t as healthy as you think. In this guide, we’ll break down what landed cost is, why it’s critical for profitability, how to calculate it properly, and the tools you can use to simplify the process.

What Is Landed Cost?

Landed cost is the total cost of a product once it arrives at your warehouse or fulfillment center, including:

• Factory or supplier cost

• Freight charges (air, sea, or courier)

• Customs duties and import tariffs

• Insurance, handling, and brokerage fees

• Miscellaneous costs (inspection, labeling, palletizing, etc.)

In short: landed cost = everything you paid to get the product from the factory floor to your shelf, broken down to the SKU level.

Why Landed Cost Matters for Sellers

Many Amazon and Shopify sellers think they’re profitable because they’re tracking factory cost + Amazon fees. But that ignores the hidden costs that quietly erode margins.

Here’s why knowing your landed cost is essential:

1. Accurate Pricing Decisions
   If you don’t know the real cost per unit, you might underprice your product and lose money — or overprice and lose the Buy Box.

2. Profitability Insights
   Landed cost ensures you’re calculating true margins after freight, duties, and other fees.

3. Cash Flow Management
   Understanding landed costs helps you forecast how much capital you’ll need for reorders and scaling.

4. Exit Readiness
   When selling your business, buyers demand audit-ready financials. Sloppy or averaged costs reduce trust — and your valuation.

The Old Way: Spreadsheets and “Magical Math”

Traditionally, sellers have used spreadsheets to calculate landed costs. They’ll dump in supplier invoices, add a shipping bill, sprinkle in some customs fees, and divide everything equally across SKUs.

The problem?

• Products vary in size, weight, and tariff rates.

• Spreadsheets can’t handle multi-shipment allocations (air + sea, split shipments).

• Variances between estimates vs. actual costs often get ignored.

• Errors compound — one bad formula and your margins are off by thousands.

This “magical math” leads to skewed numbers, bad pricing decisions, and missed profit opportunities.

How to Calculate Landed Cost Accurately

To get a true picture, you need to break costs down logically:

Step 1: Start with Factory Cost
The base cost per unit from your supplier. This is the foundation.

Step 2: Add Freight Costs
Divide freight charges by cubic meters (CBM) or weight, depending on carrier billing. Don’t just split evenly across SKUs.

Step 3: Add Customs Duties & Tariffs
Every product has an HS code and duty rate. Apply the correct tariff % to the factory cost for each SKU.

Step 4: Add Insurance & Handling
Include container insurance, drayage, warehousing, inspection, labeling, or packaging.

Step 5: Add Processing Fees
Payment processing, bank fees, and currency conversion add up.

Step 6: Calculate Per Unit Landed Cost
Total landed cost ÷ number of sellable units = true landed cost per SKU.

Common Landed Cost Mistakes (And How to Avoid Them)

1. Using Estimates Forever
   Forecasted costs rarely match actuals. Always reconcile invoice vs. actual.

2. Ignoring Split Shipments
   If you send part by air and part by sea, your averages are wrong unless you allocate correctly.

3. Missing Customs Variances
   Even small tariff rate changes can have a big impact. Always apply the correct HS codes.

4. Not Tracking Over Time
   Costs fluctuate. Without a history, you can’t see trends or negotiate better supplier terms.

Tools That Simplify Landed Cost Tracking

1. Spreadsheets (Basic)

✅ Free, flexible, but ❌ Error-prone, time-consuming, not audit-ready

2. Accounting Software (Partial)

QuickBooks or Xero track overall COGS, but rarely at SKU or shipment level.

3. SellerVue PO-to-Shipment Planner (Complete)

Purpose-built for sellers, SellerVue automates landed cost tracking:

• Build POs, match invoices, centralize documents

• Allocate freight, duty, and shipping fees per SKU automatically

• Track variances estimate-to-actual in real time

• Maintain audit-ready cost history for every shipment

• Get true landed cost visibility before reordering

With SellerVue, sellers typically recover 2–3% of revenue lost to hidden leaks — money that can fund new inventory, marketing, or expansion.

Landed Costs for Amazon Sellers

For Amazon FBA sellers, landed cost accuracy is critical because:

• Amazon fees (storage, fulfillment, returns) are already complex.

• Profit calculators often ignore shipping and customs.

• Buy Box competition means even small margin errors matter.

Accurate landed cost tracking ensures your advertising, pricing, and inventory strategies are based on real numbers — not guesses.

Landed Costs for Shopify Sellers

Shopify sellers face a different challenge: multiple suppliers, 3PL warehouses, and multi-channel shipping. Without consolidated landed cost tracking:

• Products look more profitable than they are.

• Inventory valuation gets messy.

• Scaling into new markets becomes riskier.

A centralized cost planning tool helps Shopify sellers manage complexity and make better pricing and reordering decisions.

How Landed Cost Impacts Your Exit

When it comes time to sell your business, buyers don’t just look at revenue — they look at Seller’s Discretionary Earnings (SDE).

If your landed costs are inaccurate or scattered across spreadsheets:

• Buyers apply a discount to your valuation.

• Due diligence drags out, increasing risk.

• Your exit multiple shrinks.

By contrast, sellers who can provide audit-ready cost documentation with SKU-level accuracy build trust and command higher valuations.

Final Thoughts

Landed costs aren’t optional — they’re the backbone of profitable eCommerce. If you’re not tracking them accurately, you’re leaving money on the table and risking both your margins and your future exit.

The good news? With the right system in place, you can simplify the entire process, eliminate errors, and scale with confidence.

👉 Ready to move beyond spreadsheets? Watch the SellerVue demo and see how you can track true landed costs, recover hidden profits, and grow smarter.