Product Economics

COGS vs Landed Cost in Ecommerce

COGS and landed cost are related but they answer different questions.

COGS and landed cost are related but they answer different questions. A seller should define them consistently so costs are not omitted or counted twice.

COGS

For a product model, COGS generally represents the cost attributable to the item sold. The exact accounting treatment should follow your accounting policy.

Landed cost

Landed cost is commonly used operationally to describe the cost of getting inventory to the point where it is ready for sale, potentially including freight, duties and inbound handling.

Calculator rule

If freight or duties are already included in your COGS input, do not add them again as a separate operating cost.

Use the numbers

Educational guidance is most useful when paired with your own SKU economics. Run the same assumptions through the calculator, then compare marketplaces if channel selection is part of the decision.

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