Optimize your warehouse profitability with SKUSavvy’s advanced inventory cost tracking (COGS). Learn how to manage Weighted Average Costing within SKUSavvy.
SKUSavvy’s inventory cost tracking system provides a granular, real-time valuation of physical stock. Unlike traditional systems that rely on a static 'cost' field on the product record, SKUSavvy tracks the specific financial value of items at the bin level. This ensures that fluctuations in procurement prices, shipping fees, and duties are accurately reflected in your Cost of Goods Sold (COGS) and balance sheets.
The platform utilizes a 'Moving Weighted Average' calculation. Every time new inventory is introduced to a bin via an inbound shipment or manual adjustment, the unit cost for all items in that specific bin is recalculated.
Formula: ((Current Bin Qty * Current Bin Unit Cost) + (Incoming Qty * Incoming Unit Cost)) / (Total Bin Qty) = New Moving Average Unit CostNote: Because the average is calculated at the bin level, moving items between different bins or warehouses preserves the cost associated with those specific units. If you transfer stock from a 'High Cost' bin to a 'Low Cost' bin, the receiving bin will perform a new weighted average calculation upon arrival.
To capture the 'True Cost' of inventory, you must factor in Landed Costs during the check-in process. This includes all expenses incurred to get the product onto your shelves.
CRITICAL: Landed costs must be applied BEFORE the check-in is finalized. Once units are placed into a bin, the moving average calculation is committed. You cannot retroactively apply a freight bill to inventory that has already been checked in and potentially sold.
When inventory is moved via a Transfer Order, the 'Transfer Value' is calculated based on the current unit cost in the source bin. This value is displayed in the Transfer Order footer. Upon arrival at the destination warehouse, if the items are placed into a bin already containing the same SKU, a new weighted average will be generated at the destination.
Outbound orders now capture the specific COGS for the items packed. This data is visible on the order page and available in the following export fields:
Unit Cost: The specific per-unit COGS for the item at the time of packing.
Total Cost: The summed COGS for the line item (Unit Cost * Qty).
Profit: (Total Revenue - Total Cost - Label Cost - Insurance).
Transfer Value: Total financial value of a Transfer Order for tax and insurance purposes.
When enabling Cost Tracking for the first time (Company Settings > Enable Cost Tracking), you must choose a migration strategy for existing inventory:
The system looks at the most recent Purchase Order price for each SKU and applies that cost to all current on-hand inventory. This is the fastest way to get a baseline valuation.
Existing inventory remains at $0 cost. The first time you restock a bin or manually adjust stock with a cost, that value is applied to the existing units in that bin.