How are cost prices used in Sumtracker
Cost prices are used in reports for cost of goods sold and stock valuation. When you export product list or stock by location, the cost per unit and total cost value is exported for each product.
Cost prices can be updated in the following ways:
Manual Update: Edit individual products in the Product List.
Purchase Orders: Automatically update costs from Purchase Orders (POs).
Shopify Sync: Enable "Save Cost from listings" to directly fetch cost prices from Shopify. Learn more
Update cost price of products individually
Click on Product SKU in Product List
Add cost and save the product
Cost of bundles is automatically calculated by adding the cost of its components. You can refer to it from Bundles cost report on Reports page.
Update cost price of products in bulk
Export the Product List
Add Cost corresponding the Product
Import the List
How are cost prices updated through Purchase Orders
Cost per item for each product can be updated right from the Purchase Orders.
Sumtracker calculates the landed cost per unit for each product in a PO using the formula:
Definitions
Line Subtotal = Line Quantity × (Price per unit + Shipping Fee per unit)
Extra Charges for whole PO = Shipping Fee + Duties & Charges applied for the whole PO (Distributed based on Weighted Average)
Currency Conversion Rate = 1 if PO is in default currency; update it if using a different currency.
Let us consider an example of a PO.
Product | Quantity | Price/unit | Shipping fee/unit | Line Subtotal | Tax | Line Total |
Heels | 1 | 100 | 10 | 110 | 18 | 128 |
Handbag | 2 | 200 | 20 | 440 | 0 | 440 |
|
| Total | 550 |
|
|
|
Extra Charges added separately to whole PO = $150
These extra charges will be distributed to the products based on the weighted average of the line subtotals.
Landed Cost Per Unit (using above formula):
Heels = (110 / 1) + (150 × (110 / 550)) = $140
Handbag = (440 / 2) + (150 × (220 / 550)) = $280
You can add extra charges to entire PO using "Edit Shipping & Duties" at the bottom left of the PO (for the entire PO).
You can add extra charges to entire PO using "Edit Shipping & Duties" at the bottom left of the PO (for the entire PO).
After calculating the landed cost, we calculate the new cost price as follows
Points to note:
Line taxes are excluded from cost price calculations.
Mark PO receive notes as final—only then will the landed cost be calculated from Purchase Orders.
The cost of a product will not be updated if the purchase price in the PO is set to 0.
Here's how the calculation for new cost price is done with simple examples:
Case 1: Receiving New Stock | Existing inventory = 10 units Existing cost = 10 USD/unit. You received 10 units @ 6 USD/unit. The calculation which will happen is New cost = (10 x 10 + 10 x 6)/(10 + 10) = 8 USD/unit |
Case 2: Some Inventory Sold, New Stock Added | Lets say you sell some pieces and now you have 5 units left. You receive 10 units at 5 USD/unit. New cost = (5 x 8 + 10 x 5)/(5 + 10) = 6 USD/unit |
Case 3: All Inventory Sold, New Stock Purchased | Lets say you sell all pieces. Now you buy 10 units at 4 USD/unit. New cost = (0 x 6 + 10 x 4)/(0 + 10) = 4 USD/unit |
Case 4: No Cost Price Set Previously | Let’s say that you haven’t updated the cost for a product yet. Existing inventory = 10 units Existing cost = 0 USD/unit. You received 100 units @ 6 USD/unit The new cost will be 6 USD/unit |