What is Freight cost per unit?

Freight cost per unit matters because it changes your real cost per item and your margin. If you ignore it and only look at the supplier's unit price, you can underprice products or misjudge which SKUs are actually profitable.

Use it when deciding order quantities and comparing suppliers. A supplier with a lower unit price but high freight per unit might cost more overall than one with a slightly higher price but efficient shipping. Ordering bigger batches often lowers freight cost per unit, since the shipping cost spreads across more items.

Formula

Example

A candle store orders 300 candles from a supplier and pays 150 dollars in freight. Freight cost per unit is 150 / 300 = 0.50 dollars. If the candle costs 4 dollars from the supplier, the landed cost per candle for freight purposes is 4.50 dollars before any other fees.

Common mistakes

• Forgetting to include freight when calculating product margin.
• Using an average freight cost per unit across very different order sizes, which hides the real cost of small orders.
• Mixing up freight cost per unit with total landed cost, which also includes duties and other fees.

Freight cost per unit and SteadyShelf

SteadyShelf suggests order quantities rounded to case packs, which can help you reach batch sizes that lower your freight cost per unit, though it does not calculate landed cost itself.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

Related terms

Case pack · Landed cost · Economic order quantity · Unit cost · Cost per order

Full inventory glossary

FAQ