When importing goods or shipping products to customers, there’s more to the cost than just the purchase price. Think freight, customs, insurance, and other hidden expenses this is where Landed Costs come in.
In Odoo Inventory, the Landed Costs feature ensures that these additional charges are accurately factored into your product valuation, helping you maintain true margins and financial clarity.
When you’re importing goods or shipping products to customers whether locally or internationally the sticker price is just the beginning.
You might think,
“I paid 1,00k for this shipment, so that’s my product cost.”
But is it?
Not quite.
What Are Landed Costs?
Landed Cost is the total cost of getting a product from the supplier’s location to your warehouse or customer’s doorstep. It includes:
- Product Purchase Price
- Freight Charges
- Customs Duties & Import Fees
- Clearance & Documentation Charges
- Insurance
- Handling Charges
- Taxes & Other Miscellaneous Fees
- And many Others
In short, it’s the “real cost” of stocking or delivering an item and if you’re not calculating this, your product margins might be misleading, and your pricing strategy could be off.
How to Configure Landed Costs in Odoo
To get started:
Enable the Feature
Head over to Odoo Inventory → Configuration → Settings, scroll down to the Valuation section, and check the box for Landed Costs.
Select a Default Journal where related accounting entries will be posted.
Creating Landed Cost Products
For recurring charges like shipping or customs:
Go to Odoo Inventory → Products → Create.
Name your product (e.g., “Shipping Charges”).
Set Product Type to Service.
Under the Purchase tab:
- Check Is a Landed Cost
- Choose a Split Method:
- Equal – splits cost equally across items
- By Quantity – splits by item count
- By Current Cost – based on item value
- By Weight / By Volume – based on physical attributes
Processing Purchase Orders & Vendor Bills
Once the Purchase Order (PO) is confirmed and items are received:
- Open the Purchase App
- Create the Purchase Order
Receive the Product, Do the GRN, Next
Now Once, The Material is Received, Click Create Bill from PO Itself
Add the landed cost product (Shipping Charge) as a new invoice line in bottom, as soon as it added, a button of create Landed cost will Enable. Now confirm the bill.
Applying and Validating Landed Costs
After adding landed costs to the vendor bill:
- Click Create Landed Costs
- Select the related transfer (goods receipt)
- Review the Valuation Adjustments
- Click Validate to finalize
A Valuation smart button will appear, letting you view updated stock values.
Reporting & Accounting
View overall valuations via Odoo Inventory → Reporting → Valuation
Journal entries are automatically created and can be viewed under Accounting → Journal Entries
Key Notes:
- Landed costs apply only to Storable Products
- Product categories must use AVCO or FIFO costing methods
- Supports manual or automated inventory valuation
Why Use Landed Costs?
Most businesses using Odoo Inventory track their purchase price and sale price. However, if you’re not tracking landed costs, your cost of goods sold (COGS) might be underestimated.
This leads to:
- Incorrect profit margins
- Poor pricing decisions
- Inaccurate inventory valuation
- Incomplete financial reporting
That’s where Odoo Inventory’s Landed Costs feature steps into help you assign all indirect costs to the products you’ve received, and give you a realistic view of your inventory and profitability.
Using landed costs ensures:
- Accurate product margins
- Realistic stock valuations
- Proper cost distribution across your inventory