How to Use Landed Costs in QuickBooks Enterprise
Why Landed Costs Matter
If you’re working with imported goods, freight, or tariffs, you’ve probably noticed how quickly “extra costs” can eat away at your margins. These additional expenses like shipping, duties, insurance, and storage fees are called landed costs.
Landed costs are important because they are the true cost of your product if you are not including landed costs in the cost of your product you could potentially be losing money and not even know it. Landed costs can be very helpful when doing pricing analysis and can help you determine if you are charging enough for your product.
Instead of managing landed costs in messy Excel spreadsheets, QuickBooks Enterprise gives you a built-in way to track and allocate them directly to your products. You can follow along via our Video Version or here as we walk you through exactly how to set up and use the Landed Cost feature in QuickBooks Enterprise Advanced Inventory, so your product costs are always accurate. Watch Here
What are Landed Costs in QuickBooks Enterprise?
Landed costs are all the expenses you pay to get a product into usable condition at your warehouse or storefront. That includes:
Freight and shipping charges
Import duties and tariffs
Storage and warehousing fees
Insurance
Taxes and handling costs
Any other costs associated with getting the product to your facility in a sellable condition
By tracking landed costs in QuickBooks Enterprise, you can:
Improve your true cost of goods sold (COGS)
Protect your profit margins
Avoid underpricing products
Make smarter inventory and pricing decisions
Step 1: Enable the Landed Cost Module
To use landed costs, you’ll need the Advanced Inventory add-on in QuickBooks Enterprise.
Switch to Single-User Mode and log in as the admin user
Go to Edit > Preferences > Items & Inventory > Company Preferences
Open Advanced Inventory Settings and select the Landed Cost tab
Turn on the feature
Pro tip: Landed costs are tied to a clearing account (a temporary “holding” account). Create or select an Other Current Asset account for this purpose. The landed cost account should only ever be the value of the costs that are waiting to be allocated.
Step 2: Set Up Related Cost Items
Next, you’ll create the expense categories that represent your landed costs (e.g., freight, tariffs, warehousing).
Go to Lists > Item List > New Item
Select Service as the type
Name it something clear like Inbound Freight
Link it to your Landed Cost account
Save and repeat for other cost types (duties, storage, insurance, etc.)
These items act as placeholders so you can later apply landed costs directly to your vendor bills. If you do not assign the item to the landed cost account, you won’t be able to use it for landed cost calculations in QuickBooks. It is also a good idea to set up multiple items for things like shipping, taxes, etc. that may be used for both landed costs and non-landed costs purposes to help keep the landed costs account clean.
Step 3: Apply Landed Costs to Bills
Now it’s time to use landed costs in practice.
Enter your vendor bill for products received (e.g., inventory purchase from a supplier).
Add the landed cost item you created (e.g., “Inbound Freight”) with the cost amount. Save the bill.
This can be on the same bill or a separate bill
Click Calculate Landed Costs.
Select the bill(s) and related landed costs you want to allocate.
Step 4: Choose Your Allocation Method
QuickBooks Enterprise gives you four ways to split costs across products:
Quantity: Distributes costs evenly by unit count (this ignores any price or size differences)
Percentage: Allocate based on custom percentages to are input by the user
Amount: allocates based on item dollar value (most common)
Manual: enter your own allocations
Best practice: Use Amount or Percentage for the most accurate results.
Step 5: Reconcile Your Landed Cost Account Monthly
The landed cost clearing account is a pass-through account. Once costs are allocated, the balance should return to zero. Each month, review this account to ensure:
No freight bills remain unallocated
All landed costs are properly tied to inventory items
Your COGS reflects accurate total costs
This step keeps your books clean and prevents missed allocations.
Why This Matters for Your Business
With freight, tariffs, and supply chain costs on the rise, businesses that fail to track landed costs accurately risk:
Underpricing products
Losing margin on every sale
Misreporting inventory value
Using QuickBooks Enterprise Landed Costs ensures your financials reflect real costs, helping you make smarter decisions and stay competitive in an ever changing economy.
Watch the Tutorial
Want to see the process in action? Watch the full QuickBooks Enterprise Landed Costs Tutorial on our YouTube channel: Watch Now
QuickBooks Enterprise makes landed costs easier than ever. By setting up a clearing account, creating cost items, applying expenses to bills, and reconciling monthly, you’ll:
Keep your books accurate
Strengthen your margins
Save hours of manual Excel work
If you need help setting this up for your business, reach out to Certum Solutions for support. Book a FREE discovery call here or contact us.
FAQ: Landed Costs in QuickBooks Enterprise
1. What are landed costs?
Landed costs are all the expenses incurred to get a product from your supplier to your warehouse or storefront, including freight, duties, tariffs, insurance, storage fees, and taxes. Tracking these ensures you know the true cost of your products and protect your profit margins.
2. Why are landed costs important?
Without factoring in landed costs, you could be underpricing products, losing profit on each sale, or misreporting inventory value. Accurate landed cost tracking helps with pricing analysis, inventory management, and financial reporting.
3. Can I track landed costs in QuickBooks Enterprise?
Yes! QuickBooks Enterprise with the Advanced Inventory add-on allows you to track, allocate, and reconcile landed costs directly against your inventory items, eliminating the need for messy Excel spreadsheets.
4. What types of costs can I include as landed costs?
You can include:
Freight and shipping charges
Import duties and tariffs
Storage and warehousing fees
Insurance
Taxes and handling costs
Any other expenses to get your product into sellable condition
5. How are landed costs allocated to products?
QuickBooks Enterprise offers four allocation methods: Quantity, Amount, Percentage, or Manual. Using Amount or Percentage generally provides the most accurate reflection of product costs.
6. How often should I reconcile my landed cost account?
It’s best practice to reconcile your landed cost clearing account monthly to ensure all costs are allocated, inventory values are accurate, and COGS reflects the true cost of goods.
7. Does Certum Solutions offer Quickbooks Enterprise training on this?
Absolutely! Certum Solutions provides QuickBooks Enterprise training, including advanced features like Landed Costs, so you can confidently manage your inventory and finances.
8. How can I get help setting up landed costs in QuickBooks Enterprise?
You can book a free consultation with Certum Solutions to get expert guidance on setup, allocation, and best practices. Book Your Free Consultation.