Dene: Created page with "'''Understanding Landed Costs and Average Costs''' There is a widely held mis-belief that the average costs of a product, should include the cost of shipping, delivery etc or th..."

2011-04-20T01:02:31Z

Created page with "'''Understanding Landed Costs and Average Costs''' There is a widely held mis-belief that the average costs of a product, should include the cost of shipping, delivery etc or th..."

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'''Understanding Landed Costs and Average Costs'''

There is a widely held mis-belief that the average costs of a product, should include the cost of shipping, delivery etc or the cost to land the product on your shelf.

This is not the case and should not be considered, without a very strong understanding of how this works and a strong understanding of the additional work required to maintain this belief.

The Landed Cost value is designed purely for the purpose of calculating what your sell price should be based on either a margin or a mark-up of the landed cost.

While many may have theory on how this should work the reality of it is as follows.

'''Landed Costs Expenses'''

Expense                 Delivery $1,000

Product                    Widget $  300

This makes the

Average Cost     $ 300 Landed Cost     $1,300

When you sell the Product Income              Widget Sale $2,000 

'''Landed Costs as Stand Alone'''

Income             Widget Sale  $2,000

Expense     Delivery $1,000                   COGS   $ 300 Total Expenses                    $1,300

                                     '''Nett $ 700'''

 

'''Landed Costs in Average Costs'''

Income               Widget Sale $2,000 Expense       Delivery $1,000                     COGS $1,300 Total Expenses                      $2,300

                                     '''Nett -$ 300'''

Landed Costs Understanding - Revision history

Dene: Created page with "'''Understanding Landed Costs and Average Costs''' There is a widely held mis-belief that the average costs of a product, should include the cost of shipping, delivery etc or th..."