What is Landed Cost?

Landed cost is the total cost of sourcing and transporting a product from its point of origin to the warehouse where it will be stored or processed. It includes the supplier invoice price, international freight, import duty, customs clearance fees, insurance, port handling and any inland haulage. For businesses importing goods, landed cost is the only accurate basis for pricing, stock valuation and margin calculation. Microsoft Dynamics 365 Business Central supports landed cost management through its item charges functionality, allowing all additional costs to be apportioned across received stock and reflected in the item ledger.

How landed cost works in Business Central

When a shipment arrives from an overseas supplier, Business Central posts the purchase receipt at the supplier invoice value. As freight invoices, duty statements and handling charges arrive, these are posted as item charges against the purchase receipt and apportioned across the received items. Business Central supports apportionment by item value, quantity or weight. The result is that each item in stock carries a cost that reflects its true total cost to bring in, not just the supplier price. This feeds correctly into gross margin reporting and ensures the general ledger values stock accurately at the balance sheet date.

Landed cost in practice

A UK importer receives a container from a Far East manufacturer. The supplier invoice is posted in Business Central on receipt. The freight forwarder invoice and duty assessment are then posted as item charges apportioned by value, updating the cost of each item to reflect the full landed cost before any are sold.
A buying team uses landed cost data in Business Central to compare sourcing options: a lower supplier price from one origin versus a higher price with lower freight and duty from another, calculated to a comparable landed cost for fair comparison.
A finance director uses Business Central's stock valuation report to confirm that imported stock is valued at landed cost rather than purchase price, preventing overstatement of gross margin in management accounts.
A logistics manager uses landed cost analysis in Power BI to identify which product categories carry the highest duty burden and flag these for potential tariff reclassification review.

How Advantage configures landed cost in Business Central

Advantage configures item charge codes, apportionment methods and landed cost workflows in Business Central for importing businesses. We set up the GL account structure to capture freight, duty and handling costs correctly, and build landed cost reporting in Power BI so buying teams can analyse total cost of ownership by product and supplier.

See how Business Central handles import and procurement →

Frequently Asked Questions

Common questions about landed cost and Business Central for importing and distribution businesses.

What is included in a landed cost calculation?

Landed cost typically includes the purchase price of the goods, international freight charges, import duty and customs fees, insurance costs, port handling charges, inland haulage from port to warehouse and any inspection or compliance costs. The total is then divided across the units received to give a per-unit landed cost.

Why does landed cost matter for pricing?

If a business prices products based on purchase price alone without accounting for freight, duty and handling, it will systematically underestimate cost and overstate margin. This is particularly common for businesses importing from Asia or the United States where freight costs are significant relative to product value. Business Central's landed cost functionality ensures the full cost is captured in stock valuation from the point of receipt.

Does Business Central support landed cost apportionment?

Yes. Business Central's item charges feature allows landed costs to be posted against a purchase receipt and apportioned across the received items by value, quantity or weight. This updates the cost of each item in the item ledger to reflect the full landed cost rather than just the invoice price from the supplier.