How to Work with Landed Cost in Odoo 18 (Ent)
Introduction :
In inventory and accounting management, the actual cost of a product is not just its purchase price. Additional expenses such as shipping, customs duty, insurance and handling charges also contribute to the final cost. In Odoo 18 Enterprise, the Landed Cost feature helps businesses accurately allocate these extra costs to products and maintain correct inventory valuation.
This blog explains how Landed Cost works in Odoo 18 Enterprise, step by step.
What is the Landed Cost?
Landed Cost is the total cost of a product after adding all expenses incurred to bring the product into stock.
It may include:
* Freight or shipping charges
* Customs and import duties
* Insurance costs
* Handling and logistics charges
* Other vendor bills related to procurement
Odoo allows you to distribute these costs across products automatically.
Why Landed Cost is Important
* Provides accurate product valuation
* Reflects true inventory cost
* Improves profit margin calculation
* Ensures correct accounting entries
* Helps in better pricing decisions
Enabling Landed Cost in Odoo 18
Before using landed cost, you must enable it:
1. Go to Inventory → Configuration → Settings
* Enable Landed Costs option
* Save the settings
This activates landed cost functionality in Inventory and Accounting.
Creating a Landed Cost Product
Landed costs are added using service products.
Steps 1:
* Go to Inventory → Products → Products
* Create a new product .
* Set Product Type as Service
* Enable Is a Landed Cost
* Select Default Split Method (Equal, By Quantity, By Weight, By Volume, By Current Cost)
* Save the product
Examples: Freight Charges, Customs Duty, Insurance Fee
Step 2: Create a Purchase Order
* Go to the Purchase module
* Click on Create
* Select the Vendor
* Add the required Products
* Click Confirm Order
At this stage, only the purchase order is created. No landed cost is applied yet.
2. Receive the Products
* Click on Receive Products
* Validate the receipt
Inventory is updated, but additional costs are still not included.
3. Create Vendor Bill
* From the Purchase Order, click Create Bill
* A Vendor Bill will be generated
4. Add Landed Cost Service in Bill
To see the Landed Cost button, you must:
* Add a service-type product (example: Freight, Shipping, Customs Duty)
* Ensure that product has
* Product Type = Service
* Is a Landed Cost option enabled
Once such a product is added to the bill, Odoo identifies it as a landed cost component.
5. Landed Cost Button Appears
After adding the landed cost line in the bill:
* A “Create Landed Costs” button will appear on the Vendor Bill screen
This button is visible only when:
* The bill contains a landed cost-enabled service product
* The related receipt (stock picking) is already validated
6. Create Landed Cost from Bill
* Click Create Landed Costs
* Odoo will automatically:
* Link the receipt
* Bring the additional cost lines
7. Compute & Validate
* Click Compute to distribute costs
* Click Validate
Landed Cost Split Methods Explained
* Equal – Cost is equally divided among products
* By Quantity – Based on received quantity
* By Weight – Based on product weight
* By Volume – Based on product volume
* By Current Cost – Based on product value
Choose the method based on your business needs.
Accounting Impact of Landed Cost
After validation:
* Inventory value increases
* Stock valuation journal entries are created
* Product cost is updated automatically
This ensures accurate financial reporting.
Viewing Landed Cost Impact
You can verify landed cost impact from:
* Inventory Valuation Report
* Product Cost History
*Journal Entries in Accounting
Business Use Case Example :
A company imports electronic items:
* Product cost: $10,000
* Freight charges: $1,000
* Customs duty: $500
Using landed cost, the extra $1,500 is distributed across products, reflecting the true inventory value.
Benefits of Using Landed Cost in Odoo 18
* Automated cost allocation
* Accurate inventory valuation
* Reduced manual calculations
* Better margin analysis
* Compliance with accounting standards
Conclusion :
The Landed Cost feature in Odoo 18 Enterprise is essential for businesses dealing with logistics and import-related expenses. By properly configuring and applying landed costs, companies can maintain accurate inventory valuation and financial records.
Using landed cost ensures transparency, accuracy and better decision-making in inventory and accounting operations.