Average unit cost

The average unit costs is the average cost of your current stock. Every time you receive a purchase order, your average unit cost is updated. For example, if you have 10 units of product A in stock, which has a cost price of $10 USD per unit, then your average unit cost is initially $10 USD. If you then order another 10 units of product A, this time with a cost price of $5 USD per unit, then your average unit cost is now $7.50 USD.

Average unit costs are unique to Stocky and don't display in Shopify.

Calculating average unit costs

Stocky uses the following formula to calculate the average unit cost on a purchase order:

((Current Average Cost x Current Stock Quantity) + (Landed Cost of Received Stock x Received Stock Quantity)) / (Current Stock Quantity + Received Stock Quantity)

For example, if you have 30 units of a product that have an existing average cost price of $10 USD per unit, and you receive 15 additional units at a landed cost of €8 USD per unit, then the formula is ((10 x 30) + (8 x 15)) / (30 + 15), which updates the average unit cost to $9.33 USD.

There are two cases when this formula isn't used:

• When a purchase order is created for a variant that currently has a negative stock quantity. In this case, the average unit cost will be updated to the Landing Cost of Received Stock value.
• When a purchase order is created that has a negative Received Stock Quantity which is greater than the Current Stock Quantity, resulting in an overall negative stock level. In this case, the average cost doesn't change.

Calculating landed costs

To calculate the landed cost for a variant on a purchase order, you first need to calculate the landed margin for the entire purchase order. Stocky uses the following formula to calculate the landed margin for a purchase order:

(Sub Total + Adjustments + Shipping) / Sub Total

For example, if you have a purchase order with a subtotal of $1,000 USD, an adjustment amount of $200 USD, and shipping costs of $300 USD (before tax), then the formula is (1000 + 200 + 300) / 1000, which results in a landed margin of 1.5.

To calculate the landed cost for each variant, Stocky then uses the following formula:

Variant Base Cost * Landed Margin

For example, if one of the variants on the purchase order has a base cost of $25 USD, and you calculate the landed margin to be 1.5, then the formula is 25 * 1.5, resulting in a landed cost of $35.50 USD.

Activate or de-activate automatic unit cost syncing

To have the cost per item in your Shopify admin update automatically with the value in Stocky, activate automatic updates for average unit costs. Activating automatic average unit cost syncing overwrites the existing cost per item value in your Shopify admin and can't be undone.

Steps:

1. From your Shopify admin, go to Settings > Apps and sales channels.

2. Click Stocky.

3. Click Open app.

4. In Stocky, click Preferences.

5. Click COGS.

6. In the Automatic Cost Price Syncing section, take one of the following actions:

   • To turn on automatic syncing, click Enable.
   • To turn off automatic syncing, click Disable.

Set your initial average unit costs

There are a few different ways to set your initial average unit cost:

Import a CSV file into Stocky

1. From your Shopify admin, go to Settings > Apps and sales channels.

2. Click Stocky.

3. Click Open app.

4. In Stocky, click Preferences.

5. Click COGS.

6. Click Import Initial Average Unit Costs.

7. Choose a CSV file to import and click Next.

8. An import preview of the first rows of the CSV displays. Assign the following columns:

   1. For Which column is the identifier?, select Variant Barcode or Variant SKU.
   2. For What type of identifier is this column?, select Barcode or SKU based on your previous selection.
   3. For Which column is the Average Cost?, select Cost per item.

9. Click Next.

From the SKU/Variant report

1. From your Shopify admin, go to Settings > Apps and sales channels.

2. Click Stocky.

3. Click Open app.

4. In Stocky, click Reports

5. Select the SKU/Variants report.

6. Select the Columns, and then select Average Cost.

7. Click Update.

8. A report showing each of your product variants with the associated average cost is now displayed. Enter the average cost into the Average cost column.

9. Optional: Click Save Report to save this SKU/Variant Report.

Apply the average unit costs to historical sales orders

If you want to cost of goods sold (COGS) reports for existing sales orders, then you need to apply your current average cost to those specific orders. This method might not be completely accurate, but it provides you with an approximate cost associated with each product.

Steps:

1. From your Shopify admin, go to Settings > Apps and sales channels.

2. Click Stocky.

3. Click Open app.

4. In Stocky, click Preferences

5. Click COGS, and then select Backdate Average Unit Costs.

Activate the average unit cost on in-progress purchase orders

1. From your Shopify admin, go to Settings > Apps and sales channels.

2. Click Stocky.

3. Click Open app.

4. In Stocky, click Preferences > Purchase orders.

5. Click Settings for draft PO.

6. Select Average Unit Cost.

7. Click Update.

8. Click Save changes.