Landed Product Cost: Work Out the Cost per Saleable Unit

This guide is for small retailers and makers who buy stock in batches. Bring the purchase order, freight invoice, receiving count and any clearance paperwork. You will finish with a pricing estimate. Check how losses and other costs belong in your inventory records separately.

Build the shipment total before dividing it

Start with the goods after supplier discounts. Add inbound freight, insurance, handling, clearance charges and local delivery where they belong to this shipment. Include duty if it applies to the goods; use the customs paperwork or a broker's advice rather than a standard percentage. The Australian Border Force explains tariff classification.

Keep retail packaging in its own row. Packaging needed to make the item saleable belongs in this pricing worksheet, but a mailer used to send a customer order belongs in fulfilment. Check that the same box hasn't ended up in both rows.

Assumptions: Fictional Australian-dollar management-costing example. Amounts exclude GST that is assumed recoverable; any non-recoverable tax is already included in costs. These assumptions do not establish your GST entitlement. Contribution is before unallocated overheads and income tax.

Cost or quantity	Amount	Evidence
Goods: 240 units at $14	$3,360	Supplier invoice
Inbound freight	$420	Freight invoice
Duty and clearance allowance	$180	Fictional confirmed shipment charge; not a duty rate
Handling and local delivery	$120	Delivery record
Total shipment cost	$4,080	Sum of the four cost rows
Saleable units	232	240 received, 8 damaged; no recovery assumed
Cost per saleable unit	$17.59	$4,080 ÷ 232, rounded

Original ASBG worked example. All businesses, amounts and scenarios are fictional. The table contains the same figures as the visual.

The invoice price was $14 per item. The worksheet puts the amount to recover across the 232 saleable items at $17.59 each. Keep the unrounded $17.5862 in your calculation file and round the displayed figure.

This division spreads the unrecovered cost over good units for a pricing decision. It isn't an instruction to capitalise every loss into accounting inventory. Record damage, supplier credits and insurance claims separately, and ask your accountant how those events should enter the books.

Compare quantities on the same basis

Suppose Shipment B contains 480 units at $13.50, costs $650 in freight, $300 in duty and clearance and $150 in handling. Total cost is $7,580. With 470 saleable units, that is $16.13 each.

Assumptions: Fictional Australian-dollar management-costing example. Amounts exclude GST that is assumed recoverable; any non-recoverable tax is already included in costs. These assumptions do not establish your GST entitlement. Contribution is before unallocated overheads and income tax.

Measure	Shipment A	Shipment B
Ordered units	240	480
Goods cost	$3,360	$6,480
Other shipment costs	$720	$1,100
Total cost before assumed recoverable GST	$4,080	$7,580
Saleable units	232	470
Cost per saleable unit	$17.59	$16.13

Original ASBG worked example. All businesses, amounts and scenarios are fictional. The table contains the same figures as the visual.

B is cheaper per saleable unit by about $1.46. It also requires $3,500 more before any separately recoverable GST. Check storage, demand and the time it will take to sell 470 units before treating that saving as a reason to double the order.

Allocate freight across a mixed shipment

If one carton contains two product lines, dividing freight by item count may be misleading. A bulky light item might cause more freight cost than a small expensive item. Use the carrier's chargeable weight, volume or another evidenced measure.

For a $420 freight bill, a documented 60%/40% split gives $252 to product A and $168 to product B. Divide each allocation by that line's saleable units. Keep directly identifiable charges with the relevant product, and make sure all allocations add back to $420. Don't allocate the same bill once by weight and again by value.

Keep GST and cash requirements visible

Make separate columns for the amount paid, GST confirmed as recoverable and cost retained in the worksheet. The ATO's GST-credit guidance sets the conditions; registration alone isn't a reason to remove every tax amount from every cost. Use your adviser's confirmed treatment if the purchase is mixed-use, input-taxed or an import with unclear paperwork.

Once the treatment is established, the cash schedule can show the payment and expected credit timing separately. That prevents an apparently profitable shipment leaving too little cash for the next one.

Where to get help

Use the resulting unit cost in the pricing guide. Then test a wholesale order or calculate marketplace contribution before committing to that sales channel. The pricing and profit hub connects the full set of worksheets.