A supplier price is only one part of inventory cost. A useful unit cost follows the goods until they are ready to sell and divides the total by units that can actually generate revenue.
Build the landed-cost total
Start with supplier cost, inbound freight, insurance, duty, customs or brokerage, inspection and receiving. Add packaging needed before sale. Keep later selling costs separate when you want to distinguish landed cost from contribution margin.
Use sellable units
Subtract damaged, missing, sample and unusable units from received quantity. Dividing by ordered quantity understates cost whenever shrinkage occurs. Use a realistic loss assumption and test a higher-loss case.
Move from cost to contribution
After landed cost, add platform, payment, fulfilment, return and advertising costs to test contribution per sale. Margin uses selling price as its denominator; markup uses cost, so the percentages are not interchangeable.
Worked example
Scroll the table horizontally on small screens to see every column.
| Goods and inbound costs | Units received | Unsellable units | Cost per sellable unit |
|---|---|---|---|
| 2,400 | 100 | 5 | 25.26 |
The unit result is 2,400 divided by 95 sellable units; later marketplace and advertising costs are still separate.
Sources and checks
- https://www.sba.gov/business-guide/manage-your-business/manage-your-finances ↗
- https://www.trade.gov/determine-total-export-price ↗
Examples are illustrative and can be checked with the linked tools. Read each tool’s assumptions before applying its result. How we verify methods.