Odoo Landed Costs: Freight and Duty in Product Cost

If you import goods, the purchase price is only part of the cost. Freight, customs duty, insurance and handling can add 10% to 30% or more. If these are not in product cost, your margins are wrong.

What landed costs do

A landed cost in Odoo takes an extra cost, such as a freight bill, and spreads it over the products received. Inventory value goes up, and when the goods are sold, cost of goods sold includes the extra cost.

Requirements

• Products with FIFO or average cost costing method
• Automated inventory valuation
• The landed costs option enabled in Inventory settings

See FIFO vs average cost if you have not chosen a method yet.

Setting up landed cost products

Create service products for each type of cost, such as freight, duty and insurance, marked as landed costs. Set a default split method for each.

Split methods

Weight and volume need correct data on products.

Applying landed costs

There are two common ways:

1. From the vendor bill: add the freight line to the bill, then create the landed cost from it.
2. Directly: create a landed cost, select the receipts and add the cost lines.

Validate it, and Odoo posts the journal entry and updates valuation.

Timing matters

Apply landed costs as soon as possible after receipt. If goods are sold before the cost is added, the extra cost goes partly to inventory and partly to cost of goods sold, which makes margins harder to read.

Estimates vs actual

Some companies apply an estimated landed cost at receipt and adjust when the real bills arrive. This gives better margins in the meantime but needs discipline to correct.

Common mistakes

• Using standard price, so landed costs do not change cost
• Missing product weights for weight-based splits
• Adding freight to the bill as an expense and forgetting the landed cost

Need help with inventory costing? See our Odoo inventory and Odoo accounting services.