Order Item Cost Calculation


Overview

You can apply different methods of Item Cost Calculation when analyzing Profit and Loss for an order. The analysis can be based on the items’ Site CostAverage Cost, or Last Cost. The configuration is managed by the Order Profit & Loss Calculated Using client setting.

Item Cost will be calculated in your order’s P&L based on the сlient ыetting mentioned above and the value of the Item Cost at the time the order is created in Sellercloud. Later, you can change either Items’ Cost or the Cost Calculation method, and regenerate the P&L report to display a more current value of the Order’s Cost.


Manage Order Item Cost

You can configure how the Item Cost will be calculated on your order’s Profit and Loss tab – based on item’s Site Cost, Average Cost, or Last Cost by following the steps below.

  1. Go to Settings > Client Settings > General Client Settings.
  2. Navigate to the Reporting section and select the requested method under the Order Profit & Loss Calculated Using field. Alternatively, use the search field to find that option.
  3. Click the Save icon.Item Cost Calculation Options

Calculate Using Site Cost

The Site Cost can be used when calculating the order’s Profit & Loss. You can manually set the Site Cost for a product by following the steps below.

  1. Go to Catalog > Manage Catalog > open the product.
  2. In Toolbox, select Prices > Edit.
  3. In the Price Manager panel, enter the Site Cost and click Save.Site Cost Per Product
  4. Alternatively, you can enter the Site Cost via a bulk update.

Calculate Using Average Cost

Average Cost can be used when calculating the Order’s Profit & Loss. To see the method currently applied in P&L, go to Orders > Manage Orders > select an order > Toolbox > Profit & Loss. Hover over the Items Cost value, and the method name will appear (see figure below).

Profit and Loss Method Displayed

To update the Site Cost with regard to Average Cost change, enable the Update SiteCost when updating AverageCost client setting. The setting is available under the Purchasing section of the client settings.

Calculate Using Last Cost

When the Last Cost is selected, the Item Cost in Profit & Loss is determined by the cost specified on the last Purchase Order that you received.

Item Cost Display

To update the Site Cost, enable the Update Product SiteCost Based On PO LastCost client setting. This is found under the Purchasing section of the client settings.

CLIENT SETTING DEFINITION
Order Profit & Loss Calculated Using Use this option to select the item cost calculation method to be applied in Profit & Loss report
Update Product SiteCost Based On PO LastCost Enable this option to automatically update the product’s Site Cost by its Last Cost indicated in the last PO that you received
Update SiteCost when updating AverageCost Enable this option to automatically update the product’s Site Cost once its Average Cost is changed
Consider PO Extra Costs when Calculating Product Costs Enable this option to include a PO’s extra costs when calculating Product Cost

Check out this comprehensive tour on calculating and tracking item cost in Sellercloud’s Alpha interface.


Basics of item cost

You can configure an item’s cost to calculate profit and loss (P&L) on an order with one of these options in the Client Settings’ Order Profit & Loss Calculated Using setting:
sellercloud calculate P&L setting

The chosen option will also be used in Sellercloud’s P&L reports.
  • Last Cost— Cost of the items in the last purchase order received before the order was created.
  • Site Cost— The current value entered in the product summary’s Site Cost field.
  • Average Cost Cost of the units continually averaged from the price on POs at the time of receipt. If you choose Average Cost but Average Cost is zero, Site Cost will be used on the order’s P&L tab instead.

Item cost and dropship POs

Dropship POs will update the order’s item cost to the vendor’s price on the PO, even though the PO is created after the order.

Dropshipped POs that are set to not count inventory either at the PO or Vendor level (setting on Dropship Preferences on vendor toolbox Default = True) will not create an inventory movement or average cost movement record. This means they will not be factored into average cost.


Factoring PO shipping or third-party costs into item cost

PO shipping and third-party costs can be averaged into an item’s cost to give an accurate P&L report. 

Example: If a product costs $50.00 and shipping costs $5.00, average cost on the product’s Purchasing page (Product > Toolbox > Purchasing) will be $55.00. If you ordered 2 units with a total PO shipping cost of $5.00, average cost will be divided between the units ordered, producing an average cost of $52.50. 

  • Product cost(x) + Shipping cost / Number of units

To use this feature, select Consider PO Extra Costs when Calculating Product Costs in the Client Settings. 


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