Landed costs represent the total price of a product or shipment, encompassing all expenses related to getting that product to your desired destination. These costs include shipping, insurance, customs duties, taxes, and other related fees.
In Odoo, the Landed Costs feature is vital to ensuring that these additional costs are accurately reflected in the product’s valuation. By including and monitoring these expenses, your business can better understand its inventory costs, helping you make more informed decisions about pricing, your profitability, and your overall supply chain management. This article explores how Odoo’s Landed Costs feature works and why it's essential for your business in managing complex logistics.
How Can You Set Up Landed Costs in Odoo 18?
Setting up the Odoo platform to reflect Landed Costs is a simple process. Here’s a breakdown of what you need to do.
1. Enable the Landed Costs Feature
Go to Inventory>Settings. Scroll down to the Valuation menu and activate the “Landed Costs”. After saving, the page will refresh and a section will appear to choose the default journal. Here you can select the journal in which all accounting entries related to Landed Costs should be recorded.
2. Create a Landed Cost Product
Go to Inventory>Products>Products. Click New to create a new product. As you can see in the image below, you will need to input a name; for example “International Shipping” and set it as a Service on the Product Type. After this, don’t forget to save the product.
Now go to the Purchase tab. Add this product as a Landed Cost and click on the “Is a Landed Cost?” field. From here you can select the Default Split Method. For the purposes of our example, this one can be one of the following:
Equal: Distributes the total cost evenly among all the products listed on the receipt, without considering the quantity of each item.
By Quantity: Divides the total cost among each unit of all products in the receipt.
By Current Cost: Allocates the cost based on the price of each product unit, with higher-priced items receiving a larger portion of the landed cost.
By Weight: Allocates the cost based on the weight of the products in the receipt.
By Volume: Divides the cost based on the volume of the products in the receipt.
3. Add Landed Costs to the Purchase
First order and receive a product (see image below).
After you’ve validated the products received, you will need to create a bill (see image below).
Now you can add the “International Shipping” to your bill (see image below).
And next, you can simply Pay and click on the button “Create Landed Costs” (see image below).
To link the Landed Costs to the cost of the purchased product, all you need to do is associate the transfer with your bill (see image below).
After you’ve completed this process, go to “Stock Valuation”. Here you will be able to see the cost of your product (in this case $100) including the Landing Costs (in this case $50).
New on Odoo 18: Enhanced Tracking for Landed Costs
Odoo 18 introduces a significant new feature focused on landed costs within it's project management module. This enhancement allows businesses to assign project costs and revenues to specific analytic plans, providing greater financial clarity. By enabling detailed tracking of landed costs, Odoo 18 helps businesses achieve a comprehensive understanding of total project expenses. This feature ensures that all costs associated with stock pickings and deliveries are accurately accounted for, allowing for better budgeting and profitability analysis.
Conclusion
Adding the Landing Costs to the product cost it’s essential to know the true cost of your products. By factoring in additional expenses such as freight, duties and insurance, Odoo allows your company to accurately reflect the full cost of your inventory.
Using the Landing Costs on Odoo can give you more precise financial reporting and better overall pricing strategies. This will help your business make more informed decisions, ensuring that all indirect costs are allocated to the prices of your products.
If you want to know more about the Landed Costs, Contact us
Follow Us on Social Media
Stay connected with ERPGAP and follow us on this journey. You can view updates on LinkedIn and Twitter.
Official Odoo Partner
