Skip to main content
All CollectionsProducts
Cost price of products
Cost price of products
Divij Zutshi avatar
Written by Divij Zutshi
Updated this week

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:

  1. Manual Update: Edit individual products in the Product List.

  2. Purchase Orders: Automatically update costs from Purchase Orders (POs).

  3. 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:

  1. Line taxes are excluded from cost price calculations.

  2. Mark PO receive notes as final—only then will the landed cost be calculated from Purchase Orders.

  3. 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

Did this answer your question?