Distributors and manufacturers deal with landed cost every day. The Business Dictionary defines landed cost as “the total cost of a landed shipment including purchase price, freight, insurance, and other costs up to the port of destination.” Landed cost may also include other taxes involved in the shipment such as customs duties and VAT. Landed cost is an important factor in coming up with a pricing strategy for products manufactured. It is crucial for companies who import goods for distribution or raw materials for product manufacturing to understand how much landed cost is or how it should be calculated in order to gauge profitability and pricing margins. Here are the steps to pricing your imported items with careful consideration of the landed cost:

  • Ensure you have all your costs accounted for. This pertains to all costs associated with getting your products from the supplier up until they reach your warehouse. You will be surprised with all the costs involved in your shipment. These are just few of the costs you will encounter:
    • Freight charges
    • Handling fees
    • VAT
    • Payment fees
    • Custom duties
    • Document fees
  • Determine the landed cost. As defined above, your landed cost is the value of your goods, which is the supplier price multiplied by the rate of exchange (ROE), plus all the shipping fees, duties, ancillary costs, handling costs and associated costs.
  • Make use of this formula to determine you selling price: (Cost of goods x ROE) + freight and shipping costs + duties and fees + markup + VAT = selling price

However, if you are a company that deals with numerous shipments abroad twice or thrice every few weeks, tracking of the costs manually would take ages for you to finish. You would need an ERP software to make things easier for you. ERP Consulting LLC is a company that provides an ERP software, Microsoft Dynamics GP in Pataskala Ohio. Microsoft Dynamics GP is an enterprise resource planning (ERP) software systems for SMEs or small and medium-sized enterprises. It is a solution provided by ERP Consulting LLC to help businesses manage their financial transactions, inventory and operations. If you want to make use of the Microsoft Dynamics GP in Pataskala Ohio today, call ERP Consulting LLC at 740-951-0220 or email your queries at mtaranto@erpconsultingLLC.com.

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