Managing landed costs

Landed cost is a reporting value calculated based on costs entered when receiving a stock order. This figure contributes to a product’s average cost and is subsequently used to calculate the cost of goods sold (COGS).

Understanding how landed cost is calculated

Landed cost is calculated using three values entered when receiving a purchase order:

• Supplier cost: The value per product paid to the supplier when purchasing stock. This does not include the cost of shipping or import duties.
• Shipping cost: The value paid for the purchased stock shipped from the supplier to your store. This may include singular or multiple shipments, including those between various locations.
• Import duty: The value paid in customs duties, tariffs, special taxes, and other costs associated with receiving a stock shipment.

You can find a detailed breakdown of landed costs on the Receive Delivery page in Retail POS when receiving a purchase order, or review the Latest landed cost value on the Add product page, or when editing a product or price book.

Understanding how average cost is calculated

Every product in Retail POS has an average cost, which is the weighted average of the landed cost at which the stock was received.

• Average cost is only calculated when a change in inventory is actioned, i.e, receiving a stock order or making a sale.
• Editing a product’s supply cost, shipping cost, and/or import duties in the Edit product page will not change the average cost.
• Used to calculate reporting functions such as cost of goods sold (COGS) and gross profit.

Calculating and distributing landed cost

Available on Core, Plus

1. Navigate to Inventory > Stock control > Orders and locate the stock order to receive, using filters if needed.
2. Click on the receive order icon on the right of the purchase order information.

3. Enter the received product information as outlined in Receiving purchase orders. Ensure the Supplier cost is accurate for each product being received, updating as required.

   

4. Scroll down to Subtotal of item costs, then enter the Shipping and Import duty values.

   

5. From the dropdowns, select how you wish to distribute the values for each:
   • Don’t apply to items: the values will not be applied at all.
   • Distribute based on cost: value split by proportion of cost per item.

   • Custom distribution: enter the value per item(s) up to the total value of the cost.

     

6. Confirm the Order total is as expected, then click Distribute cost.
7. Click Receive.
8. Click Receive delivery to complete.

What's next?

Receiving purchase orders

Learn how to receive purchase orders in Retail POS.

Learn more

Accurately calculating cost of goods sold (COGS) in Retail POS (X-Series)

Ensure your cost of goods sold (COGS) is calculated accurately.

Learn more