facebook page button

Delivered costs

Delivered costs for a product or service refer to the total unit cost of a product or commodity delivered to a certain market, city or customer. It is normally composed of all associated transport costs and the unit cost of production. for that product. Delivered costs should always be considered in the importing country's local currency if looking at delivered costs in from other countries as this will be a better determinant of import parity in comparison to local producers. On top of the unit cost some analyst and managers will usually include a rate of return on the unit cost similar to average industry returns or a real return which would be expected to be earnt on invested capital. The rate of return applied to the unit cost of manufacture will greatly depend on the analysis being performed and the industry.

The items to include in the composition of the delivered cost are:

Unit cost (Cost of manufacture)
Transport to export wharf or port
Transport (Road, Rail, Ocean freight)
Duty and terminal handling charges inc taxes
Quarantine costs (if applicable)
Local delivery costs

Delivered costs normally doesn't include any inventory costs., they are just intended to show the difference in delivering products from one source to different geographical areas. Delivered costs can provide different competitive forces among an industry in different geographic areas this will usually be included in a swot analysis among competitors.

    More lean concepts and terms