What does "landed cost" refer to?

Landed cost refers to the total costs associated with bringing a product to the buyer's location, encompassing all expenses incurred throughout the shipping process. This includes not only the purchase price of the product but also freight charges, insurance, customs duties, taxes, and any other expenses that arise until the product reaches the final destination.

Calculating landed cost is essential for businesses involved in international trade, as it provides a comprehensive picture of what the product will actually cost the buyer. This understanding helps in pricing strategies, budgeting, and profitability assessments when entering foreign markets or setting prices for imported goods.

The other options do not capture the full scope of what "landed cost" entails. While one choice mentions the price of a product upon arrival, it disregards additional expenses that are crucial for determining the final cost. Another choice focuses solely on transportation costs, neglecting other significant factors in the overall landed cost calculation. Lastly, the option regarding the final retail price set by foreign markets does not address the various costs incurred before the product reaches retail, making it an incomplete representation of landed cost.