FREE TOOL · LANDED COST

The Three Buckets.

Most founders pile three different kinds of money into one number and call it their cost. Then they price off it, and the number lies to them. Pull the buckets apart and the real cost of one unit shows up.

You are allowed to guess. If you have not quoted a factory yet, every number in here is a placeholder. That is the point. Get a shape now, then come back and swap the guesses for real quotes.

Your numbers

Bucket 1 · Make it

Factory cost per unit $4.50

What the factory charges you for one finished unit, packaging included. Nothing else.

Freight and duty per unit $1.20

Getting the run from the factory to you, plus import duty, divided by the units in the run. Overseas, a rough placeholder is about 18% of the factory cost.

Bucket 2 · Get started (paid once)

Setup costs, paid once $1,500

Tooling, moulds, plates, dielines, sample rounds, lab tests, artwork. Money you spend one time to make the run possible.

Units in this run 500

How many units this order makes. This is the number that decides how badly setup costs sting.

Bucket 3 · Ship one order

Shipping and fees per order $9.50

Pick, pack, postage and payment fees to get one order to a doorstep. Charged per order, not per unit.

What one unit really costs

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Landed cost per unit

This is the number you take into sourcing and pricing.

1 · Make it (landed)

2 · Setup, spread over the run

3 · Ship one order

Landed costWhat one unit costs to make and get to you.—

Cost on this runLanded, plus setup spread across these units. Only true for this run.—

Cost to the doorLanded, plus what it takes to ship one order out.—

The trap this tool exists to kill

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That is what setup money adds on top of every unit on this run alone. Slide your unit count up and watch it shrink. It was never part of what your product costs, so it never belongs in the number you price off.

Working through this with us?

Why three buckets and not one

Bucket 1 is the product. The factory price plus freight and duty. Together that is your landed cost, and it is the only cost that behaves like a true unit cost: make one more unit, pay it again. Every price you set and every quote you compare runs off this number.

Bucket 2 is the entry fee. Tooling, moulds, plates, samples, lab tests, artwork. You pay it once, whether the run is 200 units or 20,000. It looks like a unit cost only because you divided it by a small first run. Divide it by a bigger run and most of it disappears, which tells you it was never a property of the product.

Bucket 3 is the order. Pick, pack, postage and payment fees are charged when someone buys, and they scale with orders, not units. Someone who buys three units costs you one shipment, not three.

Why founders get this wrong. They add all three, divide by a 300-unit first run, and get a number that looks awful. Then they price too high, or they quit. The cost did not lie... the bucket did.

What this does not include: ads, software, your website, your time, and the units you give away. Those come out of margin later, which is exactly why margin has to be big.

This is one lesson inside the Launch Accelerator.We take these three buckets and build your real cost sheet line by line, off real factory quotes, then price the product off it.

SEE THE ACADEMY

Next up: take your landed cost into The Margin Dial and find the price that pays you. Or start further back with The Margin Napkin. Need a factory to quote these numbers? The Supplier Scorecard.