How to Use Landed Cost Tracking in NetSuite to Make Smarter Sourcing and Pricing Decisions
Stop guessing your true product costs. Learn how to capture freight, duties, and handling fees in NetSuite—and use them to negotiate better supplier terms, price with confidence, and protect your margins.
This isn’t just about accounting—it’s about making smarter decisions that directly impact your bottom line. Whether you’re importing components or shipping finished goods, landed cost tracking helps you see the full picture and act on it.
Most manufacturers think they know their cost of goods sold. But if you’re only looking at the purchase price on a PO, you’re missing the real story. Freight surcharges, customs duties, and handling fees quietly chip away at your margins—and without visibility, you’re flying blind. NetSuite’s landed cost tracking isn’t just a finance feature. It’s a strategic tool that helps you price smarter, negotiate better, and make sourcing decisions that protect your profitability.
First off, what’s landed cost tracking, and how does it help manufacturers make smarter sourcing and pricing decisions?
Landed cost tracking captures all costs associated with getting a product to your warehouse—including freight, duties, and handling fees—not just the supplier’s invoice price.
For example, a manufacturer importing steel components might find that duties and freight add 22% to the base cost, changing how they price finished goods. By allocating these costs accurately in NetSuite, you can see true per-unit margins and avoid underpricing high-cost SKUs. It helps you compare suppliers based on total cost, not just unit price—so you might choose a slightly more expensive vendor who ships more efficiently.
In a sample scenario, a manufacturer producing medical devices analyzed their landed cost data and uncovered that one supplier’s lower unit price was offset by high freight and duty charges. By switching to a supplier with more efficient logistics and favorable import terms, they reduced their total landed cost per unit by 9%. This move not only improved margins but also gave them more predictable cost structures across their product line. The decision was driven entirely by data—not assumptions—thanks to NetSuite’s granular cost tracking.
Landed cost tracking also helps identify SKUs that quietly erode margin due to high logistics costs, so you can phase them out or redesign packaging. Ultimately, it turns hidden expenses into actionable data for smarter sourcing, pricing, and product decisions.
Why Landed Cost Isn’t Just a Finance Problem—It’s a Margin Strategy
You’ve probably seen it happen: a product that looks profitable on paper ends up barely breaking even once shipping and import fees are factored in. That’s the trap of ignoring landed costs. When you treat freight, duties, and handling as background noise, you lose clarity on your true margins. And in today’s environment—where logistics costs fluctuate monthly and tariffs shift with trade policy—that lack of clarity can cost you real money.
Landed cost tracking in NetSuite gives you a way to surface those hidden costs and tie them directly to the items you’re selling. It’s not just about capturing expenses—it’s about making those costs visible at the SKU level, so you can act on them. Whether you’re sourcing raw materials from overseas or distributing finished goods across regions, you need to know what each unit truly costs to land in your warehouse. That’s the foundation for smarter pricing and sourcing.
Here’s the shift: when you start treating landed cost as a strategic input—not just a bookkeeping line—you unlock better decisions across your business. You can identify SKUs that are margin killers, renegotiate supplier terms based on total cost, and price products with confidence. You stop reacting to margin erosion and start proactively managing it. And you do it with data that’s already flowing through your system—if you know how to use it.
Take a sample scenario: a manufacturer of industrial pumps sources components from two suppliers. One offers lower unit prices, but ships in smaller batches with higher freight costs. The other ships consolidated loads with better freight efficiency. Without landed cost tracking, the first supplier looks cheaper. With it, the second supplier wins by 8% on total cost. That’s the kind of insight that changes your sourcing strategy—and NetSuite makes it visible.
Here’s a breakdown of how landed cost affects margin clarity:
| Cost Component | Often Tracked? | Impact on Margin | Why It Matters |
|---|---|---|---|
| Purchase Price | Always | High | Base cost, but not the full story |
| Freight Charges | Sometimes | Medium to High | Can vary by weight, volume, region |
| Customs Duties | Rarely | Medium | Tariff changes can swing margins |
| Handling Fees | Rarely | Low to Medium | Adds up over time, especially on bulk |
| Insurance & Misc. | Rarely | Low | Often ignored, but still part of COGS |
When you start tracking all five consistently, you get a much clearer picture of what each product really costs to sell. And that clarity leads to better decisions—not just in finance, but across sourcing, pricing, and product strategy.
Now zoom out. If you’re managing hundreds or thousands of SKUs, even small inaccuracies in landed cost can add up to major margin leakage. A 3% miscalculation on a high-volume item can mean tens of thousands lost annually. That’s why landed cost tracking isn’t just a finance upgrade—it’s a business upgrade.
Here’s another sample scenario: a manufacturer of specialty lighting fixtures imports glass components from three regions. Region A has the lowest unit cost, but the highest duties. Region B has moderate costs across the board. Region C has high unit cost but zero duties due to a trade agreement. Without landed cost visibility, Region A looks best. With it, Region B wins on margin, and Region C becomes viable for premium SKUs. That’s how landed cost data reshapes your sourcing map.
Let’s look at how this plays out across different verticals:
| Industry | Common Landed Cost Challenges | Strategic Opportunity with NetSuite |
|---|---|---|
| Electronics | High freight volatility, customs complexity | Consolidate shipments, optimize tariffs |
| Apparel | Multiple sourcing regions, variable duties | Compare landed cost per supplier |
| Industrial Equipment | Bulky items, high handling fees | Allocate by volume, identify margin leaks |
| Food & Beverage | Perishable goods, insurance costs | Track spoilage risk vs. landed cost |
| Chemicals | Regulatory fees, specialized freight | Adjust pricing based on compliance costs |
The takeaway? Landed cost isn’t just a number—it’s a lens. It helps you see which products are truly profitable, which suppliers are truly efficient, and which pricing strategies are truly sustainable. And once you start using that lens, you’ll wonder how you ever made decisions without it.
How NetSuite Captures Landed Costs—Without Spreadsheet Chaos
You don’t need to wrestle with spreadsheets to get clarity on landed costs. NetSuite gives you a clean, structured way to capture freight, duties, and handling fees directly within your item receipts or vendor bills. The key is using the Landed Cost subtab, which lets you assign additional charges to specific items based on how those costs behave—by weight, quantity, or value. This isn’t just cleaner bookkeeping; it’s the foundation for smarter pricing and sourcing decisions.
The allocation method matters more than most realize. Freight charges often scale with weight or volume, while insurance might be better tied to the value of goods. Flat handling fees? Quantity-based allocation usually makes more sense. NetSuite lets you choose the right method per cost type, so you’re not spreading a $2,000 freight bill evenly across a shipment of bolts and compressors. That level of granularity helps you avoid distorted margins and mispriced SKUs.
You can also pull landed cost data from multiple sources. If the freight charge is on the same vendor bill as the goods, NetSuite can allocate it automatically. If it comes from a third-party logistics provider, you can enter it manually or link it to the item receipt. This flexibility means you’re not stuck waiting for all invoices to arrive before updating your cost data. You can move faster, with more confidence, and keep your pricing decisions aligned with reality.
Here’s a sample scenario: a manufacturer of lab equipment receives a shipment of glassware and precision sensors. The freight cost is $1,800, but the sensors weigh far less than the glassware. Allocating by weight ensures the glassware absorbs most of the freight cost, which reflects the true logistics burden. Without this, the sensors would appear overpriced, and the glassware underpriced—leading to skewed margins and poor pricing decisions.
| Cost Type | Best Allocation Method | Why It Works |
|---|---|---|
| Freight | Weight or Volume | Reflects actual shipping burden |
| Duties | Value | Tariffs are percentage-based on item value |
| Handling Fees | Quantity | Often flat per unit or per pallet |
| Insurance | Value | Premiums scale with declared item value |
| Customs Broker | Quantity or Flat Rate | Usually charged per shipment or per line item |
When you align cost allocation with cost behavior, you get cleaner data and better decisions. And NetSuite’s built-in workflows make this easy to implement without custom scripting or external spreadsheets.
The Real Power: Using Landed Cost Data to Make Smarter Decisions
Once you’ve captured landed costs accurately, the real value kicks in—using that data to make better decisions. Pricing is the first place this shows up. If you’re setting prices based only on purchase cost, you’re missing the full picture. Landed cost data helps you price with confidence, knowing your margins are protected even when logistics costs fluctuate.
Let’s say you manufacture specialty coatings. Some raw materials come from overseas and carry high duties. Others are sourced locally with minimal freight. Without landed cost visibility, you might price both products similarly. But once you factor in the true cost to land each item, you realize one SKU needs a 12% price bump to maintain margin. That’s the kind of insight that keeps your pricing aligned with reality—and your profitability intact.
Supplier negotiations are another area where landed cost data becomes a powerful tool. When you know exactly how much freight and duties add to each supplier’s invoice, you can negotiate smarter. You might push for consolidated shipments, better Incoterms, or switch to suppliers with more efficient logistics. You’re no longer negotiating on unit price alone—you’re negotiating on total cost.
Here’s a sample scenario: a manufacturer of HVAC components compares two suppliers. Supplier A offers lower unit prices but ships in small batches with high freight costs. Supplier B’s unit prices are 6% higher, but they ship consolidated loads with lower duties. NetSuite’s landed cost tracking reveals that Supplier B’s all-in cost is actually 9% lower. That insight leads to a supplier switch—and a healthier bottom line.
| Decision Area | How Landed Cost Helps | Resulting Benefit |
|---|---|---|
| Pricing | Reflects true cost per SKU | Protects margin, avoids underpricing |
| Supplier Selection | Compares total cost, not just unit price | Better sourcing decisions |
| SKU Rationalization | Identifies low-margin or high-cost items | Streamlines product portfolio |
| Bundling Strategies | Groups SKUs with similar cost profiles | Improves perceived value and margin |
| Market Expansion | Assesses cost impact by region | Informs go-to-market planning |
You’re not just capturing data—you’re using it to drive better outcomes across sourcing, pricing, and product strategy. That’s what makes landed cost tracking in NetSuite more than just a finance feature.
Common Pitfalls—and How to Avoid Them
Even with the right tools, landed cost tracking can go sideways if you’re not careful. One common mistake is allocating costs manually in spreadsheets. It seems harmless at first—just a few formulas and some copy-paste. But as shipments grow and SKUs multiply, errors creep in. A single misallocation can distort margins across dozens of products. NetSuite’s automated allocation eliminates this risk and saves hours of manual work.
Another pitfall is tracking landed costs only at the invoice level. That gives you a general sense of total spend, but it doesn’t help you understand which SKUs are margin winners or losers. You need to enable “Track Landed Cost” on item records to get SKU-level visibility. That way, you can see how each product performs—not just how much you spent overall.
Ignoring tariff changes is another blind spot. Duties can shift quickly based on trade agreements, regulatory updates, or geopolitical events. If you’re not updating your landed cost data regularly, you’re at risk of sudden margin drops. NetSuite lets you adjust duty rates and reallocate costs as needed, so you’re not caught off guard.
Here’s a sample scenario: a manufacturer of industrial adhesives imports a key chemical compound. A new tariff increases duties by 15%, but the team doesn’t update the landed cost data. Pricing stays flat, and margins erode quietly over two quarters. Once the error is caught, they adjust pricing—but the damage is done. With NetSuite’s landed cost tracking, that tariff change would’ve triggered a cost update and a pricing review within days.
| Pitfall | Impact on Business | How to Fix It in NetSuite |
|---|---|---|
| Manual allocation via spreadsheet | Errors, delays, distorted margins | Use automated allocation by weight/value |
| Invoice-level tracking only | No SKU-level insight | Enable “Track Landed Cost” on items |
| Ignoring tariff changes | Sudden margin erosion | Update duty rates regularly |
| Flat allocation across SKUs | Mispriced products | Allocate based on cost behavior |
| Delayed cost entry | Pricing decisions based on old data | Enter costs at receipt or bill level |
Avoiding these pitfalls isn’t hard—it just requires discipline and the right workflows. NetSuite gives you the tools. You just need to use them consistently.
Industry Use Cases That Prove the Point
Different industries face different landed cost challenges—but the principles apply across the board. In electronics manufacturing, freight volatility and customs complexity are major pain points. A manufacturer of smart sensors uses NetSuite to allocate freight by weight and track duties by country of origin. This helps them compare suppliers not just on price, but on total cost. Over time, they shift sourcing to regions with better duty structures and save 11% on average landed cost.
In apparel, sourcing from multiple regions means juggling different duty rates, freight costs, and compliance fees. A manufacturer of performance outerwear uses NetSuite to compare landed costs across suppliers in three countries. They discover that one supplier’s lower unit price is offset by high duties and slow shipping. By switching to a slightly more expensive supplier with better logistics, they improve margin and reduce lead time.
Industrial equipment manufacturers often deal with bulky items and high handling fees. A producer of hydraulic systems uses NetSuite to allocate landed costs by volume. This reveals that certain SKUs are absorbing disproportionate logistics costs. They redesign packaging and consolidate shipments to reduce handling fees—improving margin by 7% on those SKUs.
In food and beverage, perishables add complexity. A manufacturer of gourmet sauces imports ingredients with short shelf lives. They use NetSuite to track insurance costs and spoilage risk alongside landed cost. This helps them adjust pricing and sourcing to maintain margin—even when logistics delays occur.
| Industry | Key Landed Cost Challenge | NetSuite Tactic Used | Outcome Achieved |
|---|---|---|---|
| Electronics | Freight volatility, customs | Allocation by weight, duty tracking | 11% cost reduction |
| Apparel | Multi-region sourcing | Supplier comparison by total cost | Faster shipping, better margins |
| Industrial Equipment | Bulky items, handling fees | Allocation by volume, packaging redesign | 7% margin improvement |
| Food & Beverage | Perishables, insurance costs | Insurance tracking, spoilage monitoring | Pricing aligned with risk |
These examples show how landed cost tracking isn’t just useful—it’s transformative. It helps you see what’s really driving your costs and gives you the tools to act on it.
3 Clear, Actionable Takeaways
1. Use NetSuite’s landed cost tracking to price with confidence—not guesswork. Don’t rely on purchase price alone. Freight, duties, and handling fees can quietly erode your margins if they’re not captured and allocated properly. By enabling landed cost tracking at the item level and using allocation methods that reflect real cost behavior, you’ll gain clarity on your true cost of goods sold. That clarity lets you price smarter, protect your margins, and avoid underpricing high-cost SKUs.
2. Make supplier decisions based on total cost—not just unit price. NetSuite helps you compare suppliers on the full picture: unit cost plus freight, duties, and other charges. This lets you negotiate better terms, consolidate shipments, and choose partners who deliver real value—not just low sticker prices. You’ll stop chasing discounts and start optimizing for profitability.
3. Audit your top SKUs and sourcing regions regularly to catch margin leaks early. Set a quarterly rhythm to review landed cost data across your highest-volume items. Look for SKUs with rising freight or duty costs, and adjust pricing or sourcing accordingly. Use NetSuite’s reporting tools to surface trends and act before they impact your bottom line. This habit alone can save thousands annually.
Top 5 FAQs About Landed Cost Tracking in NetSuite
How do I enable landed cost tracking for specific items in NetSuite? Go to the item record, check the “Track Landed Cost” box, and choose your preferred allocation method (weight, value, or quantity). This ensures costs are applied at the SKU level.
Can I allocate landed costs from multiple vendor bills to a single item receipt? Yes. NetSuite allows you to link landed costs from different bills or manually enter them on the item receipt. This flexibility helps you capture all relevant charges, even if they arrive separately.
What’s the best allocation method for freight charges? Freight is typically best allocated by weight or volume, depending on how your logistics provider charges. NetSuite lets you choose the method that matches your cost structure.
How often should I review landed cost data? At minimum, review quarterly—especially for high-volume SKUs or imported items. If you’re in a volatile logistics environment, monthly reviews may be more effective.
Does landed cost tracking affect inventory valuation? Yes. When properly configured, landed costs are added to item cost, which affects inventory valuation and margin reporting. This gives you a more accurate financial picture.
Summary
Landed cost tracking isn’t just a feature—it’s a decision-making engine. When you capture freight, duties, and handling fees accurately in NetSuite, you unlock a deeper understanding of your true product costs. That understanding helps you price with precision, negotiate with leverage, and source with confidence.
You don’t need to overhaul your entire workflow to start seeing results. Begin with your top SKUs, enable landed cost tracking, and set up allocation rules that reflect how costs behave. From there, use the data to guide pricing reviews, supplier negotiations, and product portfolio decisions.
Manufacturers who use landed cost data well don’t just protect their margins—they grow them. They make decisions based on reality, not assumptions. And they build pricing and sourcing strategies that hold up under pressure. If you’re ready to stop guessing and start optimizing, landed cost tracking in NetSuite is one of the smartest moves you can make.