Unlock Accurate Costing and Profitability with Landed Costs in Odoo
What is Landed Cost?
Landed cost refers to the total cost of acquiring a product from a vendor and getting it delivered to its final destination, such as a warehouse or store. It includes all the expenses incurred beyond just the purchase price. These costs can include:
- Purchase Price – The base cost of the product paid to the vendor.
- Shipping & Freight Charges – Costs for transporting the product, whether by air, sea, or land.
- Customs Duties & Taxes – Import/export duties, tariffs, and other government-imposed fees.
- Insurance – Coverage for the goods during transit to protect against loss or damage.
- Handling Fees – Costs related to loading, unloading, and moving the goods.
- Storage & Warehousing – Charges for storing goods before they are dispatched to the final location.
- Other Miscellaneous Fees – Documentation fees, brokerage charges, port handling charges, and compliance costs.
Landed Costs in Odoo
Cost of the product relies on multiple factors other than the purchase cost, tracking the true cost is always a herculean task, if you underestimate the actual expense incurred. Landed Cost in Odoo plays a vital role in this segment to ensure the total cost of the product.
Step 1 : Enable the Landed Cost feature in Odoo Inventory.
Step 2 : Create product category & enabling the inventory valuation
Then, we need to create product category, enabling the inventory evaluation either to FIFO/AVCO based on the need. First In First Out is the common costing method used in COGS( cost of Goods sold), this will ensure the product first arrived will be moved first. The Average cost (AVCO) method is a method of inventory valuation that calculates the cost of goods sold (COGS) by averaging the cost of all units of inventory on hand.This method will confirms error free method of calucalting the COGS.
Step 3 : Hence we can call the same product category while creating the product.
Step 4 : Create the landed cost
Now, we can move forward for the creation of Purchase Order and receiving the products. Once the product is received, we can create the landed cost which is incurred against it.
Selected menu (Inventory -> Operations-> Landed Costs) then leads to the Landed cost filling page, where you can select the splitting method.
Step 5 : Landed cost splitting method
* Equal: This method splits the landed cost equally among all the products in the transfer receipt.
* By Quantity: This method splits the landed cost based on the quantity of each product in the transfer receipt.
* By Current Cost: This method splits the landed cost based on the current cost of each product in the transfer receipt.
* By Weight: This method splits the landed cost based on the weight of each product in the transfer receipt.
* By Volume: This method splits the landed cost based on the volume of each product in the transfer receipt.
Step 6 : Landed cost Calculation
Step 7 : Landed cost effect in product
