Inventory · Odoo glossary
Landed Costs
Understand landed costs, how freight and related charges affect inventory value, and how Odoo allocates additional costs across received products.
Definition
In general ERP practice
Landed cost is the acquisition cost of goods including the additional costs needed to bring them to their intended location and condition. Depending on the accounting policy, these may include freight, insurance, customs duties and handling.
The practical question is how to allocate a shared shipment charge to individual products. The allocation basis should reflect the cost being distributed, rather than automatically treating every item as equally expensive to transport.
In Odoo
Odoo’s Landed Costs feature allocates additional charges to inventory receipts. A landed-cost charge is configured as a service product. Available split methods include equal shares, quantity, current cost, weight and volume.
Users select the relevant validated transfers, calculate valuation adjustments and validate the landed-cost record. Odoo’s documentation specifies FIFO or average costing (AVCO) for products receiving landed costs through this workflow. The chosen journal records the resulting accounting entry.
Illustrative unit-cost calculation
Purchase value
100 identical units at €20 each: €2,000.
Additional freight
€300 distributed by quantity: €3 per unit.
Combined cost
€23 per unit, or €2,300 for the shipment, before any other eligible adjustments.
Illustrative arithmetic only. The accounting treatment of individual charges depends on the applicable policy.
Choosing an allocation basis
Quantity can suit identical units; weight or volume may better explain the transport cost of dissimilar items. A commercial margin calculation can be misleading if relevant acquisition costs are left outside the product cost.
Official Odoo documentation
The Odoo-specific explanation above is based on the documentation for Odoo 19. Features and workflows can differ in other versions.
Related glossary terms
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