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COGS vs Landed Cost: Which Should You Use in Ecommerce Profit?
Pick a consistent product cost basis for margin models so sourcing and logistics changes do not break your forecasts.
Published: 2026-04-23
Definitions in one sentence
COGS usually focuses on product acquisition cost, while landed cost includes inbound logistics and duties allocated to each unit.
Which basis to use for pricing decisions
Use landed cost when logistics volatility materially changes your break-even price. Use COGS-only when you intentionally separate freight into its own line item every order.
- Pick one basis and keep it stable across channels for comparability
- If you split freight, ensure shipping fields capture outbound delivery consistently
Common failure mode
Teams mix COGS from invoices with shipping estimates that already include inbound freight, double counting logistics and inflating margin.