Two suppliers quote you the same product. One charges $2.00 a unit, the other $2.15 — and the $2.15 quote is the cheaper one. That sounds backwards until you know how to calculate landed cost wholesale: the full amount a product has actually cost you by the time it is sitting on your shelf, ready to sell. Unit price is only the first line of that number. Freight, fees and handling quietly rewrite it, and retailers who price from the sticker alone end up wondering where the margin went.
What landed cost includes
Landed cost is every cost that has to happen before a unit can be sold, divided by the number of saleable units. For a typical domestic wholesale order it has five parts:
- Product cost — the invoiced price of the goods themselves.
- Freight and delivery — what it cost to get the order to your door, including any pallet or delivery surcharges.
- Insurance in transit, if you pay for it.
- Fees and duties — customs duties on imported goods, brokerage or handling fees charged by the supplier or carrier.
- Receiving costs you can tie to the order — for most small retailers this is small, but a paid delivery appointment or storage charge belongs here, not in general overheads.
What does not belong in landed cost: your rent, staff time in general, marketing, or the cost of selling. Those matter for profit overall, but mixing them in makes two orders impossible to compare. Landed cost answers one question only — what did this unit cost me, on the shelf?
The landed cost formula, and a worked example
The formula is simple:
Landed cost per unit = (product cost + freight + insurance + fees) ÷ number of saleable units
Worked example. You order 10 cases of a household product, 24 units per case — 240 units — at $48 a case:
- Product cost: 10 × $48 = $480
- Freight: $60
- Supplier handling fee: $12
- Total landed cost: $552
- Landed cost per unit: $552 ÷ 240 = $2.30
The sticker price said $2.00 a unit ($48 ÷ 24). The shelf truth is $2.30 — 15 percent higher. If you had priced the product for a 40 percent margin off $2.00, your real margin is much thinner than planned. Now compare the rival quote: $2.15 a unit with freight included and no handling fee. Its landed cost is exactly $2.15 — cheaper than the “cheaper” quote, and you only see that once both offers are on the same basis. This is why every price comparison, and every negotiation, should start from landed cost; our guide on how to price wholesale products for resale picks up from this number and builds the selling price on top of it.
Splitting freight fairly across a mixed order
Real orders mix products: three cases of one line, five of another, different weights and values. The fair way to share the freight is by weight when items are similar in value, or by product value when weights are misleading (light but expensive beauty products next to heavy grocery cases). Pick one method and use it consistently — consistency matters more than the method, because it keeps product-to-product comparisons honest month after month. Suppliers who quote a case price with delivery included have already done this job for you; note which of your suppliers do, because it makes their quotes directly comparable to your shelf cost.
The mistakes that make cheap stock expensive
Ignoring freight on small orders. Freight is a fixed-ish cost: the same $60 delivery adds 30 cents a unit to a 200-unit order and only 6 cents to a 1,000-unit order. Small, frequent orders can quietly carry the highest landed costs in your store — one reason the quantities discussion in our wholesale minimum order quantities guide matters for profit, not just for storage.
Counting damaged or short units as free. If 240 units arrive and 6 are unsaleable, your saleable units are 234, and the landed cost per unit rises accordingly. Divide by what you can actually sell, not what the invoice says you bought.
Comparing one supplier’s delivered price with another’s ex-freight price. This is the single most common costing error in small retail. Convert every quote to landed cost per unit before it enters any comparison, spreadsheet or negotiation.
Forgetting the fee lines. Payment terms can add or save real money too — an early-payment discount lowers your true cost, a card surcharge raises it — so read costing together with our guide to wholesale payment terms.
A two-minute habit that protects every margin
For each order, keep one line in a notebook or spreadsheet: total invoiced cost, total extra charges, units received, units saleable, landed cost per unit. It takes two minutes when the delivery arrives and it turns every future decision — reordering, repricing, switching supplier — into a comparison of true numbers instead of memories. Browse the categories you can cost this way on our homepage, and build the habit order by order.
Get a landed-cost view before you commit
If you are comparing offers or planning an order and want the numbers laid out cleanly — product, freight and fees combined into one true cost per unit per category — email your list to ceo@mastersstorezllc.com. Masters Storez will lay out the full landed picture for the categories you are considering, so the price you negotiate from is the price you actually pay.