# 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) + (Receiving Stock Cost x Receiving Stock Quantity)) / (Current Stock Quantity + Receiving Stock Quantity)

For example, if you have 30 units of a product that costs 10 USD per unit, and are ordering another 15 units at only 8 USD per unit, the formula would be `((10 x 30) + (8 x 15)) / (30 + 15)` which totals an average unit cost of 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 Receiving Stock Cost value.
• When a purchase order is created that has a negative Receiving 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.

## 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, click 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, click 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, click 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, click 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, click 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.

Can’t find the answers you’re looking for? We’re here to help.