# Landed Costing – Know Your True Costs

Knowing your true costs is essential for any business to measure its profitability. Further to this, if you are only capturing the supplier invoiced costs of goods in order to measure Gross Margin then you could be missing the true Cost of Goods.

Consider the following scenario:

An item is purchased from a supplier at an Invoiced price of \$1000. You then sell it for \$1900.

This makes the Gross Margin for the Item 47.37%

Gross Margin % =

\$1900 minus \$1000 = \$900 (This is Gross Profit)

\$900 divided by \$1900 = .4737

.4737 Multiplied by 100 = 47.37%

Hmmm, that’s a pretty good margin, however if we were to look at the bigger picture.

Let’s say it cost you a further \$250 to land this item into your store allowing for Freight, Insurance, Duty etc. Therefore the ‘landed cost‘ of the item should be \$1000 + \$250 = \$1250 not \$1000

Now what would the margin show….. 34.21% This is your ‘True Margin

There are many ways of spreading Landing Charges across the value of goods on a shipment. eg: Qty, Value, Duty %, Volume and Weight. It all depends upon the types of goods you are purchasing.

Typically, if the landed costs are calculated by businesses the exercise of spreading these charges is done manually or via a spreadsheet. This can be cumbersome and complicated to use.

Ostendo Operational Software offers a purpose built Landed Costing module as standard functionality. This allows you to spread unlimited shipment charges (of varying currencies if required) using any of the above methods.

In summary, knowing your true landed costs of product is essential in determining profitability. Without including or allowing for these costs , you could be fooling yourself into thinking a product is more profitable to you than it actually is.

# Key Performance Indicator (KPI) Reporting

Every business has their own KPIs. These allow owners and managers to measure activity in numerous areas of the organisation.

Measuring KPIs will allow you to pick up on trends whilst also being able to compare actual results verses targets.

Regular monitoring gives you a ‘heads up’ on things that may need addressing before it’s too late to react.

What’s more they don’t need to be based on financial information.

Examples of KPIs……..

• Number or Value of  Orders taken this week
• Number or Value of Quotes raised this week
• Number of Quotes converted into Orders this week
• Total number of hours posted to jobs for the day
• Average Invoice Value
•  Total day or month to date sales value
• …………. and many more..!!!…..

Ostendo can automatically email these KPI statistics directly to you, whether it be daily, weekly or monthly. What’s more, we can configure Ostendo to email specific KPIs to different people. They don’t even need to be Ostendo users!

Sample Ostendo KPI email:…

# Quick Date Entry Shortcuts

A date can be automatically inserted into any date field by typing in any of the following codes and then pressing the Tab key:

(example: current date is 15/6/2014)

1. tod will return ‘today’ 15/06/2014
2. 15/6 will return 15/06/2014
3. bom will return  beginning of month’ 1/06/2014
4. eom will return ‘end of month’ 30/06/2014
5. y will return yesterday 14/06/2014
6. m will return next Monday from today
7. tu will return next Tuesday from today
8. w will return next Wednesday from today
9. thu will return next Thursday from today
10. fr will return next Friday from today
11. sa will return next Saturday from today
12. su will return next Sunday from today