Editors Note: This is part of my series on sales math.

**Landed cost** is the simplest *loaded* cost to deal with. The **landed cost** is calculated by adding the actual cost of the product (raw cost) with the shipping costs. Here are a couple of examples.

The washing machine you sell has a cost of $200 and the freight company charges $50 to pick it up at your vendor and deliver it to your store. The **landed cost** is the sum of these two figures, or $250. That is what it cost to get the washing machine to a point where you can sell it.

Sometimes though, it is a little different. The carton of 24 light bulbs costs you $40 and the freight is $10. That makes the **landed cost** $50, but you sell the bulbs individually. Now we have to do some math.

The cost of each bulb is $1.67 ($40 /24). The freight for each bulb is $0.42 ($10/24), so the **landed cost** of each bulb is $2.09. You can also just add $40 + $10 to get $50 and divide it by 24 or $2.08. The difference is a rounding issue.

The next cost you need to become familiar with is the Loaded Cost, which we’ll discuss next.

(note: the definitions given on The Magnum Life are for salespeople, not accountants.)