What your stock really cost you: FIFO and landed costs
Ask a shop owner what an item costs and you'll usually hear the price on the supplier's last invoice. That number is often wrong in two ways, and both make your margins look better than they are.
Problem one: you didn't buy all your stock at the same price
Say you bought 100 bottles of cooking oil at $2.00 each, and next month the price rose and you bought another 100 at $2.40. When you sell a bottle, what did it cost you?
If you use the latest price for everything, you understate the profit on the old stock and get confused when the numbers don't add up. If you use an average, the real cost of what's on the shelf gets blurred.
FIFO (first in, first out) says: the first goods you bought are the first goods you sell. So the first 100 bottles you sell are costed at $2.00, and the next 100 at $2.40. That matches how most shops actually move stock, oldest first, and it means the cost of each sale reflects what you really paid for that batch.
StockGuard costs stock oldest batch first, automatically. You don't have to track which batch a bottle came from. The system does it as you sell.
Problem two: the invoice isn't the whole cost
Goods rarely arrive for just the invoice price. There's freight to get them to you, customs duty if they were imported, clearing charges, sometimes a fee to the bank. All of that is part of what the stock cost you.
If those costs go into "expenses" and never reach the products, every item looks cheaper than it was. You set prices on a cost that's too low, and the gap only shows up when the month's profit is smaller than the sales suggested.
On the Growth and Ultimate plans, when you receive a delivery against a purchase order you can add freight, duty and other costs, and StockGuard spreads them over the goods by value. A $300 item in the shipment carries more of the freight than a $3 one. The cost on each product becomes the landed cost: what it really took to get it onto your shelf.
Why it matters
Put the two together and your margin reports show something you can act on:
- Which products actually make money once freight and duty are counted.
- When a supplier's price rise starts eating your margin. Once the older, cheaper batch has sold, sales are costed at the new price, so the change shows up in your reports instead of being guessed at.
- Whether your prices need to change, based on what you paid rather than what you remember paying.
Pricing from real costs isn't complicated. It just needs the right numbers, and your till can keep those for you.