How your best analyst defines it

Landed cost vs the store platform's cost field

Landed cost is what a unit really cost to get onto your shelf: the factory price plus freight, duty, tariffs, insurance, brokerage and inbound handling. The cost field in a store platform like Shopify usually holds whatever someone typed in when the product was created, often the factory price alone and rarely updated. Margins built on it look better than they are, and the gap grows exactly when freight or tariffs move.

By Jim Wilson · Updated October 14, 2026

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A worked example

Sample figures for one style, made overseas:

  • Factory price: $18.00, the number in the store platform's cost field.
  • Ocean freight and inbound handling: $1.90.
  • Duty and brokerage: $3.10.
  • Landed cost: $23.00, 28% above the cost field.

At a $64 net price, the store platform shows a 71.9% gross margin. The real figure is 64.1%. Now suppose one reorder ships by air at $4.50 a unit instead of $1.90: landed cost on that lot rises to $25.60 and its margin to 60%, and the store platform still says 71.9%.

Why this matters for AI

Point a general-purpose AI at a store export and it will calculate margin from the cost field, confidently and wrongly. It has no way to know the true figure lives in a different file. Telling it, once, is one of the first things written down in an operations audit, and it is what keeps the close pack, contribution margin and the slow-moving inventory report honest.

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Questions

What goes into landed cost?

The supplier price, ocean or air freight, duty and tariffs, customs brokerage, insurance, and inbound handling at the warehouse. Some brands also include sampling and inspection. The point is to write down the list once.

Why not just update the cost field in the store platform?

You can, but it holds one number per product while landed cost changes with every shipment. Most finance teams keep the true figure in a landed-cost file or the accounting system, and that file should be the source of truth.

How much can the gap be?

It depends on how far and how you ship. For goods made overseas, freight and duty commonly add a meaningful share on top of the factory price, and an air shipment or a tariff change can move it sharply within a season.

Which cost should the margin reports use?

Landed cost, from the file finance trusts, applied at the time of sale. That way gross margin, contribution margin and inventory value all agree.

Thirty minutes. Bring one question your team answers every week.

I'll show you how generic AI answers it, how your best analyst would, and what it takes to close the gap.

jim@trimtabops.com