Odoo Inventory Tips: Integrating Landed Costs for True Product Pricing

 Odoo Inventory Tips: Integrating Landed Costs for True Product Pricing

When importing goods or shipping products, the cost goes beyond the purchase price. Freight, customs, insurance, and other hidden expenses often impact the real cost of your inventory. This is where Landed Costs in Odoo Inventory come into play. By using this feature, businesses can ensure that all additional charges are accurately factored into product valuation, helping maintain true margins and financial clarity.

What Are Landed Costs?

Landed Cost is the total expense of getting a product from the supplier’s location to your warehouse or customer’s doorstep. It goes beyond the sticker price and includes:

• Product purchase price
• Freight and shipping charges
• Customs duties and import fees
• Clearance and documentation charges
• Insurance
• Handling fees
• Taxes and other miscellaneous expenses

In short, landed cost reflects the real cost of stocking or delivering an item. Without considering these expenses, your product margins may be misleading, and your pricing strategy could be inaccurate. You can explore more about this in our detailed Odoo Landed Costs blog.

Configuring Landed Costs in Odoo Inventory

Setting up landed costs in Odoo Inventory is simple and ensures accurate cost allocation.

Step 1: Enable the Feature

Navigate to Inventory → Configuration → Settings. Under the Valuation section, enable Landed Costs and select a default journal for accounting entries.

Step 2: Create Landed Cost Products

For recurring charges such as shipping or customs:

• Go to Inventory → Products → Create
• Name the product (e.g., Shipping Charges)
• Set product type as Service
• Under the Purchase tab, check Is a Landed Cost

You can then choose a split method to allocate costs:

• Equal — Splits cost equally across items
• By Quantity — Based on item count
• By Current Cost — Based on item value
• By Weight/Volume — Based on physical attributes

Step 3: Apply Landed Costs During Purchase

Once a purchase order (PO) is confirmed and goods are received:

• Create the Purchase Order in Odoo
• Receive the products and record the Goods Receipt Note (GRN)
• Add the landed cost product (e.g., shipping charge) while creating the vendor bill
• Once added, a Create Landed Cost button appears. Confirm the bill to proceed.

Step 4: Validate Landed Costs

• Click Create Landed Costs
• Select the related transfer (goods receipt)
• Review valuation adjustments
• Validate to finalize

A valuation smart button will then display updated stock values, reflecting accurate costs.

Reporting & Accounting

Odoo automatically updates journal entries and inventory valuation when landed costs are applied.

• View valuations under Inventory → Reporting → Valuation
• Track journal entries in Accounting → Journal Entries

Key Notes to Remember

• Landed costs apply only to Storable Products
• Product categories must use AVCO or FIFO costing methods
• Works with both manual and automated inventory valuation

Why Landed Costs Matter for Your Business

Many businesses only track purchase and sales prices. However, without landed costs, the Cost of Goods Sold (COGS) is underestimated, leading to:

• Inaccurate profit margins
• Poor pricing decisions
• Misleading inventory valuations
• Gaps in financial reporting

By leveraging Odoo Inventory’s Landed Cost feature, companies gain:

• Accurate product margins
• Realistic stock valuations
• Proper allocation of indirect costs

This ensures better pricing strategies, reliable reporting, and improved financial health.

Final Thoughts

Implementing landed costs in Odoo Inventory is crucial for businesses dealing with imports, logistics, or large-scale product movements. It gives you a true picture of your inventory value and profitability.

At Ahex Technologies, we specialize in Odoo ERP implementation and customization, helping businesses set up advanced modules like landed costs for smarter operations. To learn more about landed costs, check our detailed guide here.

Looking to optimize your Odoo setup for accuracy and profitability?

Get in touch with us today and let’s transform the way you manage your inventory.