Finance

    Landed Cost

    The total cost of a product including purchase price, freight, insurance, customs duties, and handling fees.

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    Key Takeaways

    • Landed cost captures the true acquisition cost by adding freight, duties, and handling to the purchase price.
    • Without landed cost allocation, product margins are overstated and pricing decisions are based on incomplete data.
    • Odoo allocates landed costs by quantity, weight, volume, or value depending on how additional costs correlate with products.

    Allocation Methods for Landed Costs

    MethodBest ForExample
    By ValueCustoms duties (often percentage-based)$10K duty on $100K shipment: allocated proportionally by product value
    By QuantityPer-unit handling or inspection fees$500 inspection cost across 1,000 units = $0.50/unit
    By WeightFreight charges (weight-based pricing)Shipping cost distributed by kg
    By VolumeContainer shipping (space-based)Costs allocated by cubic meters occupied

    In practice, a single shipment may use multiple allocation methods: freight by weight, duties by value, and handling by quantity. Odoo supports applying different methods for each cost type within the same landed cost record.

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