All You Need to Know about Landed Costs in Odoo Inventory
Unlocking the Potential of Landed Cost in Odoo

  by Khurram Iftikhar
Customer Success Consultant, Numla

What is Landed Cost?

Landed cost refers to the complete price of a product that a buyer must pay at the time of purchase. It encompasses various expenses such as transportation, customs duties, handling fees, service charges, shipments, and more. To determine the selling price of a product, these additional costs are added to the actual price of the product. The method of calculating the landed cost may vary across different companies based on their policies.

Activating Landed Costs in Odoo Inventory

In the Odoo Inventory module, you can calculate the landed cost and allocate it among each quantity of the product to update their selling price. To activate the Landed Costs option, go to the Settings menu as illustrated in the image below.

Activate landed cost in Odoo Inventory

Managing Purchase Orders and Confirming Orders

Enabling this feature allows you to implement customized landed costs for your products. To comprehend the operations related to landed cost, start by creating a purchase order for products within the same category and confirm the order. You can assign landed costs to products whose costing method is set as AVCO or FIFO. The inventory valuation of such products should be automated, which is a prerequisite for configuring landed costs.

Managing purchase orders and confirming orders in Odoo Inventory

Receiving and Validating Products

Now create a purchase order, the unit prices of the purchased products can be observed under the Products line. Clicking on the Confirm Order button will finalize your purchase. Subsequently, you can receive the products in your inventory by clicking on the Receive Products button.

Confirming order in Odoo purchase
Checking receipt in odoo purchase
Receiving products in Odoo inventory

Validate the transfer of the products by clicking the Validate button. This action will stock the purchased products in the designated location mentioned in the receipt. You have the option to add landed costs to these products when selling them.

Validating transfer of products in Odoo purchase
Validate transfer of products in Odoo purchase

Adding Landed Costs to Products

Let's imagine that you incurred some expenses during the transfer of these products to the destination location. You can add these additional charges to the products as part of the landed cost. With the help of the landed cost feature in Odoo Inventory, you can create additional charges for the products. To do this, navigate to the Operations menu of the Inventory module. You will find the Landed Costs platform there, as depicted in the image below.

Landed costs in Odoo inventory

By using the Create button, you can generate a new landed cost.

Create new landed costs in Odoo inventory

In the respective field, you will find the Date of creation. In the Apply On field, select Transfers since we want to add landed costs for transfers. Specify the ID of the receipt created earlier in the Transfers field. The Journal, Company, and Vendor Bill of the products can be specified in their respective fields.

Creating landed cost in Odoo inventory

 Note:  Here, we mentioned Transportation as an additional cost. While configuring Transportation as the additional cost, don’t forget to save it as a service product as shown in the image below.

Transportation cost as additional cost
Transportation cost as landed cost

Mentioning Additional Costs and Split Method

Under the Additional Costs tab, you can mention the additional costs by clicking the Add a Line button. For instance, you can specify Transportation as an additional cost.

After mentioning the Product, Description, and Account details, you can select the appropriate Split Method. The Split Method determines how the landed cost will be allocated among the products mentioned in the transfer receipt. It can be set as Equal, By Quantity, By Current Cost, By Weight, or By Volume, depending on your company's policy.

In this case, we will select the split method as Equal. Finally, you can validate the landed cost using the Validate button.

Mention additional costs
Validate landed cost in Odoo inventory

Valuation Adjustments

The smart button labeled ‘Valuation adjustments’ provides details of the landed cost's valuation. As shown in the screenshot below, you can observe that the landed cost is equally distributed among the products included in the specific receipt.

The product template has been revised to include the updated cost of 350, reflecting the additional expenses.

Valuation adjustments
View stock valuation
Revised product template with updated cost in Odoo inventory
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