How to calculate landed cost per order
Then add the label for cost to serve.
To calculate landed cost per order, add unit cost, a share of inbound freight and any duties and fees to get landed cost per unit, then add packaging, payment fees and the outbound label to get cost to serve the order. GoatLabels shows two of those lines on the Pro plan.
See the outbound label before you buy it
USPS (up to 70 lb), UPS and FedEx side by side on domestic parcels, and DHL on international lanes, one all-in number each before you buy, with no carrier account needed.
A prepaid wallet, a dated line per label
Top up a prepaid wallet and each label debits its own dated ledger line. A carrier adjustment after shipping, such as a re-weigh, posts to the same wallet.
What is landed cost, and what is cost to serve an order?
Landed cost is the cost of getting stock to you. It covers what you paid for the goods, what it cost to move them to your door, and any duties and fees on the way in. Cost to serve an order is larger: it is landed cost plus the costs that appear only when someone buys, which are packaging, payment fees and the outbound shipping label. Searchers use "landed cost" for both, so this page says which one it means each time.
Why bother with the second number? Prices set from landed cost alone leave out the label, and on a small parcel the label can be a large share of what the item cost you. Cost to serve is the number that tells you whether an order made money.
Outside facts, checked
- IRS Publication 538 says that for merchandise you buy, cost means the invoice price minus appropriate discounts plus transportation or other charges (IRS Publication 538, Cost Method). That is the inbound half of this page's formula.
- Duty rates sit in the Harmonized Tariff Schedule, which the U.S. International Trade Commission publishes online (Harmonized Tariff Schedule). This page quotes no rate, because rates change.
Everything else on this page is arithmetic on numbers you supply. The dollar amounts in the tables are invented for the example.
Checked
| Cost | In landed cost per unit | In cost to serve an order | Where the number comes from |
|---|---|---|---|
| Unit cost | Yes | Yes | Supplier invoice, divided by units |
| Inbound freight | Yes | Yes | Freight bill for the shipment, spread over its units |
| Duties, tariffs and customs fees | Yes, where they apply | Yes | Customs entry or broker invoice |
| Packaging | No | Yes | Cost of the box and fill per order |
| Payment fees | No | Yes | Processor statement, per order |
| Outbound shipping label | No | Yes | What you paid the carrier for that parcel |
Checked 2026-11-05. Where a cost sits in your books is a question for your accountant; for pricing, put all six in the per-order number.
What is the landed cost formula?
Landed cost per unit is unit cost plus your share of inbound freight plus your share of duties and fees, where those apply. Work it out once per shipment you receive, because freight and fees change from shipment to shipment.
- Unit cost = supplier invoice total divided by units received.
- Freight per unit = the shipment's freight bill, spread over its units by the method in the next section.
- Duties and fees per unit = customs duty, brokerage and similar charges on that shipment, spread the same way. Domestic stock may have none.
- Landed cost per unit = line 1 + line 2 + line 3.
- Cost to serve an order = landed cost of every unit in the order + packaging + payment fee + outbound label.
Subtract any shipping the buyer paid you from the label line before you compare to price, or keep it as a separate income line. Either way, write the choice down so each month is built the same way.
How do you spread inbound freight across a shipment?
Divide the freight bill by a common basis, then give each product its share. Units, value and weight are the three usual bases, and they give different answers when products differ in size or price. Pick the one that matches how the freight was priced and keep it.
Example: one shipment holds 60 units of Product A (unit cost $10.00, half a pound each) and 40 units of Product B (unit cost $20.00, two pounds each). The freight bill is $220.00. That is 100 units, $1,400.00 of goods and 110 pounds.
| Basis | Freight per unit, Product A | Freight per unit, Product B | When it fits |
|---|---|---|---|
| By units | $2.20 | $2.20 | Every unit takes the same share. Simple, and it flatters the heavy product. |
| By value | $1.57 | $3.14 | Share follows what you paid. Fits freight priced on declared value or insurance. |
| By weight | $1.00 | $4.00 | Share follows pounds shipped. Fits freight that the carrier priced by weight. |
Invented numbers. By value: $220.00 times $600.00 over $1,400.00 is $94.29 for Product A, or $1.57 a unit, and $125.71 for Product B, or $3.14 a unit. By weight: $220.00 over 110 pounds is $2.00 a pound. By units and by weight the shares add back to $220.00. By value they are rounded to the cent, so they multiply back to $219.80, which is 20 cents short. Keep more decimals in your sheet so the shares add up to the bill.
Under the weight basis, Product A lands at $11.00 a unit and Product B at $24.00. Under the unit basis they land at $12.20 and $22.20. The total freight is the same, but the unit basis makes the light, cheap product look more expensive and the heavy one look cheaper, which can push you to underprice the heavy one.
Where do duties and fees fit, and where do you find the rates?
Duties and fees sit in landed cost, spread over a shipment like freight, and the rates come from your customs paperwork or the tariff schedule. Goods bought from a domestic supplier usually carry no duty, so that line is zero. Goods you import can carry duty, tariffs and customs or brokerage fees, and the rates depend on the product, the country of origin and the date. They change, so this page gives none. Take them from your customs entry or your broker's invoice for the shipment, and look up the classification in the Harmonized Tariff Schedule on the U.S. International Trade Commission site. For a rate you plan to rely on, ask a licensed customs broker.
Treat the duty on a shipment like freight: it is a known amount for that shipment, spread over its units by units, value or weight. If a duty is charged on value, spreading it by value matches how it arose.
What does landed cost per order look like worked through?
In this example, with invented numbers, one order for one unit has a landed cost of $9.60 and a cost to serve of $18.30. The first four lines are landed cost per unit. The next three are the costs of this particular order, and the last two give the result.
| Line | Example amount | How you get it |
|---|---|---|
| Unit cost from the supplier | $8.00 | Invoice price divided by units |
| Share of inbound freight | $1.20 | $120.00 freight spread over 100 units |
| Share of duties and customs fees | $0.40 | $40.00 spread over 100 units |
| Landed cost per unit | $9.60 | Sum of the three lines above |
| Packaging for the order | $0.85 | Box, tape, filler, insert |
| Payment fee on a $39.00 order | $1.45 | From your processor statement |
| Outbound shipping label | $6.40 | What you paid the carrier for this parcel |
| Cost to serve the order | $18.30 | Landed cost plus the three order lines |
| Contribution on a $39.00 sale | $20.70 | Sale price minus cost to serve |
Example only. Every amount is invented, and none is a GoatLabels price or a carrier rate.
In this example landed cost per unit is $9.60, but cost to serve the order is $18.30. The label costs more than freight, duties and packaging put together, so a price built on $9.60 would be wrong by nearly half of the true cost. Repeat the table for each basket size you sell, because a two-unit order shares one box, one payment fee and one label.
How do you use cost to serve in your pricing?
Divide cost to serve by one minus the share of the price you want to keep. The share is a decimal here: to keep 40 cents of every dollar of price, use 0.60 as the divisor.
- Break-even price: about the cost to serve itself, $18.30 in the example, before any shipping the buyer pays.
- Target price: $18.30 divided by 0.60 is $30.50 in the example. Payment fees move with the price, so redo the payment fee line at $30.50 and run the sum again.
- Free shipping offers: the label stays in your cost to serve even when the buyer sees no shipping line, so price the item to carry it.
- Shipping charged to the buyer: subtract it from the label line and use the net figure.
Review the numbers whenever freight, a supplier price or your carrier mix changes, and at least once a quarter. Landed cost for last quarter's shipment is not the landed cost of this one. For the shipping side in more depth, see the true shipping cost of an order.
What can GoatLabels give you for this calculation?
On the Pro plan, the Operations hub's month-end statement shows units shipped, shipping paid and product cost at your own unit costs, by SKU and sales channel. That gives you two lines of this calculation: the outbound label and the unit cost. You can download it as a PDF or CSV for your bookkeeper.
What GoatLabels does and does not do. The Operations hub is included on the Pro plan, $40 a month (prices checked ), with no separate add-on fee. Free accounts do not have the statement. The hub does not calculate landed cost. It keeps one current unit cost per product, with no FIFO or average costing and no way to spread inbound freight or duties. If you want landed cost in the statement, work it out as above and enter the result as the product's unit cost. Receiving a purchase order line at a new cost overwrites that field, so check it after you receive.
Three conditions apply. Product cost needs your unit cost on a product whose SKU matches the label line, and it counts as zero for an unmatched SKU or a product with no cost. Product cost in a past month uses today's unit cost, so past months are not locked, and changing a unit cost changes how last month reads. Shipping by SKU is an allocation, split by declared value when every line has one and by units otherwise, so it is not what each SKU cost to ship. Packaging and payment fees are yours to add.
Landed cost per order: FAQ
- What is landed cost per order?
- Landed cost usually means what it cost to get stock to your door: unit cost, inbound freight, and duties and fees where they apply. This page calls the result landed cost per unit. Add packaging, payment fees and the outbound label and you have cost to serve one order.
- Is landed cost the same as COGS?
- They overlap but are not the same. IRS Publication 538 says the cost of merchandise you buy is the invoice price minus appropriate discounts plus transportation or other charges. Where packaging, payment fees and the outbound label sit in your books is a call for your accountant.
- Does landed cost include the shipping label to the customer?
- Usually not. Landed cost stops when stock reaches you. The outbound label is a cost of each sale, so this page adds it to get cost to serve an order, which is the number to price from.
- How do I spread inbound freight across products?
- Pick one basis and use it every time. Units, value and weight all work. Units are simplest, weight suits freight the carrier priced by weight, and value suits freight priced on declared value. The table on this page shows all three on the same shipment.
- Does GoatLabels calculate landed cost?
- No. On the Pro plan the month-end statement shows shipping paid and product cost at your own unit costs, by SKU and sales channel, which gives you two lines of the calculation. GoatLabels keeps one current unit cost per product and has no way to spread inbound freight or duties.
Related reading: GoatLabels plans and pricing, the true shipping cost of an order, the Operations hub, how to calculate shipping cost per SKU, how to record shipping costs in QuickBooks and Xero, how to run purchase orders for an online store, how to calculate a reorder point, how to set low-stock alerts, how to sync stock to Shopify and WooCommerce, how to set up scan-to-pack, how to make a pick list.
Put a real label price
in your cost to serve.
GoatLabels prices USPS (up to 70 lb), UPS and FedEx side by side on domestic parcels, and DHL on international lanes, one all-in number each, paid from a prepaid wallet with a dated ledger line per label. That line is the outbound label in your cost to serve.
Label prices are the same on the Free and Pro plans.