Invoice-to-usable-unit cost anatomy and realized proceedsThe shrink chamber exposes how defects concentrate every order-level cost
Business
Supplier Order Unit Economics Calculator
Calculate the real economics of a supplier order at the usable-unit level. The model separates invoice quantity from sellable quantity, applies freight and duty to their correct bases, includes order-level and per-unit receiving costs, carries financing over lead time, and reduces selling proceeds for channel fees and returns. It reports cash committed, landed cost, usable-unit cost, contribution, margin, and the price required to meet a target margin.
Usable-unit landed cost-
Total cash committed-
Usable units-
Realized proceeds / usable unit-
Contribution / usable unit-
Contribution margin-
Target-margin selling price-
Cost pressure-
Landed-cost cargo anatomy
Trace every cash layer into the units that can actually be sold
MerchandiseLogistics and borderUsable-unit contribution
| Cost layer | Calculation base | Order total | Per invoiced unit | Per usable unit | Share of committed cash |
|---|
Supplier-order cost method
Reconcile the invoice to the units capable of earning normal proceeds
- Enter invoice quantity and supplier price from the same quotation or purchase order.
- Add shipment-level freight, customs duty, brokerage, inspection, and receiving cash on their correct bases.
- Carry the committed cash over the cash-to-receipt cycle using the entered annual financing rate.
- Remove defective or unsellable units before dividing total committed cash into usable-unit cost.
- Reduce selling price for channel fees and returns, then compare realized proceeds with usable-unit cost.
Landed-cost notation
Order-level cash and unit-level economics meet only after yield is known
Detailed calculation process
Concentrate every order cost over usable yield before testing margin
Merchandise = Q * P_sDuty cash = Merchandise * dHandling cash = Q * h Financing base = Merchandise + Freight + Duty + Brokerage + HandlingFinancing cash = Financing base * i * t / 365Total committed cash = Financing base + Financing cash Usable units = Q * (1 - z)Usable-unit cost = Total committed cash / Usable unitsRealized proceeds = P_c * (1 - channel fee) * (1 - return rate)Contribution = Realized proceeds - Usable-unit cost Worked default order
A quoted $8.40 unit becomes a $12.55 usable-unit commitment
The default order contains 2,400 units at $8.40, $3,850 freight, 6.5% duty, $920 brokerage and inspection, $0.72 handling per unit, a 4.5% defect rate, and 95 days financed at 11% annually.
Merchandise = 2,400 * $8.40 = $20,160Duty = $20,160 * 0.065 = $1,310.40Handling = 2,400 * $0.72 = $1,728 Financing base = $20,160 + $3,850 + $1,310.40 + $920 + $1,728 = $27,968.40Financing = $27,968.40 * 0.11 * 95 / 365 = $800.74Committed cash = $28,769.14 Usable units = 2,400 * 0.955 = 2,292Usable-unit cost = $28,769.14 / 2,292 = $12.55Realized proceeds = $24.95 * 0.86 * 0.94 = $20.17Contribution = $20.17 - $12.55 = $7.62, or 37.8% of proceeds The reverse check solves a target-margin shelf price of about $23.89, which is below the entered $24.95 and therefore agrees with the reported margin-above-target condition.
Procurement evidence
Documents that should replace estimates
- Supplier pro forma invoice and Incoterm
- Forwarder freight and insurance quote
- Tariff classification and customs valuation
- Receiving inspection and defect report
- Channel settlement and return data
Unit-cost limitation
Customs and return economics can be more complex
The model applies duty to merchandise value, treats returns as reduced proceeds, and assumes all usable units share one cost. It excludes VAT recovery, tariffs on freight, demurrage, exchange rates, chargebacks, refurbishing, multi-SKU allocations, and salvage from defects.
Supplier order unit economics FAQ
Questions about yield, financing, and pricing
Should freight be divided by invoice or usable units?
Use invoice units for the operational rate, but usable units for the economic cost because defective units still consume freight.
Why multiply by both channel and return factors?
The model first removes the channel share and then weights proceeds by the expected share of sales that remain retained.
Can I compare suppliers with different order sizes?
Yes, provided order-level costs and defect assumptions are entered separately for each supplier scenario.
Practical examples
Supplier Order Unit Economics Calculator in real planning situations
- Compare a low quote with a higher defect rate against a cleaner supplier.
- Measure how air freight changes usable-unit margin.
- Find the selling price needed to preserve margin after returns and marketplace fees.
Important note
Before relying on this result
Calculated from the entered values using the displayed accounting method. Reconcile material decisions with source records and applicable accounting policy.
Additional Supplier Order Unit Economics Calculator questions
Why divide order costs by usable units?
Defective or unsellable units consume purchasing and logistics cash but do not create normal selling proceeds.
Is duty applied to freight?
This calculator applies duty to merchandise value only; confirm the customs valuation rules for the shipment.
How are returns treated?
The entered return rate reduces realized proceeds while the physical unit cost remains committed.