Odoo Landed Costs: Import Cost Calculation Guide

What Are Landed Costs?

Landed costs represent the total cost of a product when it arrives at your warehouse — not just the purchase price, but also freight, customs duties, insurance, brokerage fees, and handling charges. Odoo's Landed Cost feature distributes these additional costs across the products in a shipment, giving you accurate per-unit costs for inventory valuation and pricing decisions.

Module Setup

Landed costs are part of the Inventory module. Enable them in Settings → Inventory → Valuation section → Landed Costs. Your products must use automated inventory valuation (FIFO or AVCO) for landed costs to adjust product values automatically.

Prerequisites

• Automated Valuation — Products must use FIFO or Average Cost (AVCO) valuation
• Product Category — Set costing method on the product category
• Accounting Integration — Stock valuation accounts must be configured

# Product category configuration:
# Costing Method: Average Cost (AVCO) or FIFO
# Inventory Valuation: Automated
# Stock Valuation Account: 1400 Inventory
# Stock Input Account: 1401 Stock Interim (Received)
# Stock Output Account: 1402 Stock Interim (Delivered)
# Expense Account: 5100 Cost of Goods Sold

Types of Landed Costs

Creating Landed Cost Products

Create a service product for each type of additional cost:

# Product: Ocean Freight
# Type: Service
# Category: Landed Costs category
# Cost: Variable (entered per shipment)

# Product: Customs Duty
# Type: Service
# Category: Landed Costs category
# Cost: Variable (percentage-based)

# Product: Cargo Insurance
# Type: Service
# Category: Landed Costs category
# Cost: Variable

Applying Landed Costs

Step-by-Step Process

1. Receive goods — Validate the receipt in Inventory
2. Create Landed Cost — Inventory → Landed Costs → Create
3. Select receipt — Link to the received shipment transfer
4. Add cost lines — Enter freight, duty, insurance amounts
5. Choose allocation method — How costs are distributed
6. Validate — Odoo distributes costs and creates journal entries

Allocation Methods

Landed costs must be distributed across the products in the shipment. Odoo supports several allocation methods:

By Current Cost

# Allocation by current cost (proportional to product value):
# Product A: 100 units × $10 = $1,000 (50%)
# Product B: 50 units × $20 = $1,000 (50%)
# Total product value: $2,000

# Freight cost: $500
# Product A gets: $500 × 50% = $250
# Product B gets: $500 × 50% = $250

# New costs:
# Product A: $10 + $2.50 = $12.50 per unit
# Product B: $20 + $5.00 = $25.00 per unit

By Quantity

# Allocation by quantity:
# Product A: 100 units (66.7%)
# Product B: 50 units (33.3%)
# Total units: 150

# Freight cost: $500
# Product A gets: $500 × 66.7% = $333.33
# Product B gets: $500 × 33.3% = $166.67

By Weight

# Allocation by weight:
# Product A: 100 units × 2kg = 200kg (40%)
# Product B: 50 units × 6kg = 300kg (60%)
# Total weight: 500kg

# Freight cost: $500
# Product A gets: $500 × 40% = $200
# Product B gets: $500 × 60% = $300

By Volume

Similar to weight, but uses the volume field. Useful for container shipping where space is the limiting factor.

Equal Split

Divides the cost equally among all product lines regardless of quantity, weight, or value.

Accounting Impact

When landed costs are validated, Odoo creates journal entries:

# Journal entry for landed costs:
# Debit: Stock Valuation Account (1400)  $500
#   (increases inventory value)
# Credit: Landed Cost Clearing Account   $500
#   (or directly expense/payable account)

# The vendor bill for freight:
# Debit: Landed Cost Clearing Account    $500
# Credit: Accounts Payable               $500

Impact on Product Cost

• AVCO (Average Cost) — Landed costs increase the average unit cost for all units of that product in stock
• FIFO — Landed costs are added to the specific lot/batch that was received, affecting only those units

Multi-Currency Landed Costs

When import costs are in foreign currencies:

• Enter costs in the original currency
• Odoo converts at the exchange rate on the landed cost date
• Exchange rate differences are handled in accounting

Reporting

• Landed Cost Records — History of all applied landed costs
• Inventory Valuation — Shows updated product values including landed costs
• Cost Breakdown — Per-unit cost analysis by component (purchase + freight + duty)
• Vendor Analysis — Freight and duty costs by shipping vendor

Best Practices

• Apply promptly — Add landed costs as soon as you have the freight/duty invoice
• Choose the right method — Weight for freight, value for customs duty, quantity for handling
• Track by shipment — Keep each shipment's landed costs separate for accuracy
• Review product costs — Check that unit costs make sense after allocation
• Use consistent accounts — Standardize landed cost clearing accounts

DeployMonkey + Landed Costs

DeployMonkey's AI agent configures landed cost products, allocation methods, and accounting accounts for accurate import cost tracking and inventory valuation.