Solution · Inventory
Know what stock costs, what it is worth, and when it runs out
Weighted-average cost on receipt
Same product, two purchases
- In stock: 100 units at $10
- $1,000
- Received: 100 units at $12
- $1,200
- Total value of 200 units
- $2,200
- Cost used for the next sale
- $11 per unit
Illustrative figures. Freight and duty on the order are added before the average is taken.
The problem
Where this goes wrong without the right numbers
The cost on file is the last one someone typed
Buy the same item at two prices and most tools keep whichever you entered last, so every sale is costed wrongly.
A missing cost looks like a free product
Marketplaces know what a product sold for, never what you paid. A catalogue with no costs shows near-100% margins that are not real.
You find out about stock-outs too late
Cash sits in slow stock while fast sellers run out. Neither is visible from a list of quantities.
How it works
Three steps
Record what you buy
Create purchase orders for your suppliers with freight, duty and other charges, and receive stock when it arrives.
Costs update themselves
Receiving a purchase order blends the new price with the stock already held. The next sale is costed at that weighted average.
Watch cash and cover
See cash tied up in stock, days of cover from the last 90 days of sales, and what to reorder.
What you get
What ProfitIQ does for this
Clear cost precedence
A received purchase order wins; then a cost you typed in ProfitIQ; then the cost your store reports (such as Shopify’s cost per item).
Landed cost
Freight, duty and other charges are spread across a purchase order’s lines by value, so each unit carries its real cost.
“Profit before costs”
A product with no cost is not costed at zero and shown as profitable. The dashboard says so and shows no margin until a cost exists.
Apply costs retroactively
Enter a cost after orders were synced and one action applies it to the orders already in the ledger.
Stock forecast
Days until a product runs out, from its real sales over the last 90 days, with suggested reorder quantities to cover the next 30.
Supplier payables
Balances owed to suppliers are aged from the due date, not the invoice date, so you can see who is late and by how much.
FAQ
Common questions
What is weighted-average cost?
It is the blended price of the stock you hold: total money spent divided by total units. When a new delivery arrives at a different price, the average moves, and later sales are costed at the new figure.
What is landed cost?
Landed cost is the full cost of getting a unit ready to sell: the supplier’s price plus freight, customs duty, insurance and anything else paid to bring it in. See the landed cost guide.
Which cost wins if I have more than one?
A received purchase order first, then a cost you typed into ProfitIQ, then the cost your store reports. A received PO beats a typed cost because it is what you actually paid.
Can it forecast stock-outs?
Yes. It divides current stock by each product’s real daily sales over the last 90 days to estimate days of cover, and flags products likely to run out within two weeks.
Keep reading
Questions? Ask the team.
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