The supplier invoice is only the starting point
Purchase cost often excludes freight, insurance, duty, brokerage, inspection, labeling, preparation, and inbound transportation. Omitting these items makes the product look more profitable and weakens comparisons between suppliers or shipping methods.
Use an allocation method that matches the cost
- Allocate weight-driven freight by shipment weight.
- Allocate volume-driven freight by cubic volume when appropriate.
- Assign SKU-specific preparation and labeling directly.
- Allocate shared brokerage or inspection costs consistently across the shipment.
- Document duty and tax treatment separately so recoverable amounts are not mixed with permanent cost.
Handle damaged and short units
If the shipment arrives with fewer sellable units than purchased, the surviving units absorb more of the shipment cost. Divide by received sellable quantity, then track supplier credits separately instead of assuming perfect yield.
Keep shipment versions
Freight rates and order quantities change. Store landed cost by shipment and use a weighted average or other documented inventory method for analysis. Reprice when the new cost is material rather than waiting for margin to deteriorate in the settlement report.