Average Cost calculations

This article explains how StoreFeeder works out the Average Cost of a product, what makes it change, and how to set it yourself.

What is Average Cost?

Average Cost is the average amount you paid for each unit of a product you have in stock. You can find it on the product's Additional Information tab, alongside Total Stock Value and Last Cost Price. Each value is shown both excluding and including VAT.

How StoreFeeder works out the Average Cost depends on whether the product is on a purchase order:

The product isn't on any purchase order: the Average Cost is the cost price of its default supplier.
The product is on at least one purchase order: the Average Cost is worked out from the prices of the purchase orders you book in.

Note: The examples in this article use prices excluding VAT. The VAT-inclusive Average Cost works the same way, using the VAT-inclusive price from your purchase order. If you can't see Average Cost on the product, ask your account admin to check your user permissions.

Products that aren't on a purchase order

If a product isn't on any purchase order, its Average Cost is the cost price of its default supplier. If that supplier uses a different currency, the cost is converted into your account's currency. If there's no supplier cost price, the Average Cost is £0.00.

StoreFeeder recalculates the Average Cost from the default supplier's cost price when you:

change a supplier cost price on the product page
update supplier costs with a product import or a supplier import
update supplier costs through the StoreFeeder API
make a stock adjustment on the product page

A purchase order counts as soon as the product is added to it, even if it's still a draft or hasn't been delivered yet. Deleted purchase orders don't count. Once the product is on a purchase order, changing the supplier cost price no longer changes the Average Cost.

Booking in a purchase order

When you book in a purchase order, StoreFeeder combines the cost of the new stock with the value of the stock you already have:

New Average Cost = (value of stock already held + value of stock just booked in) ÷ total units now in stock

For example:

What happens	Units in stock	Total Stock Value	Average Cost
You start with 10 units that cost £5.00 each	10	£50.00	£5.00
You book in 10 more at £8.00 each (£80.00)	20	£130.00	£6.50 (£130.00 ÷ 20)

StoreFeeder uses the price excluding VAT from the purchase order line. If the purchase order is in a different currency from your account, the price is converted into your account's currency using the exchange rate on the purchase order.

Sales and other stock changes

For a product that's on a purchase order, sales, stock adjustments, returns, transfers and write-offs don't change the Average Cost. Any units that leave or arrive this way are valued at the current Average Cost, so your Total Stock Value goes up or down but the average stays the same.

Continuing the example above, if you then sell 5 units:

What happens	Units in stock	Total Stock Value	Average Cost
You sell 5 units (5 × £6.50 = £32.50)	15	£97.50	£6.50 (unchanged)

When stock reaches zero

If the stock of a product that's on a purchase order reaches zero, StoreFeeder keeps the last Average Cost. Your next delivery then starts the average again from its own price.

For example, if the Average Cost is £8.50 when stock reaches zero, it stays at £8.50. If you then book in 10 units at £15.00, the new Average Cost is £15.00.

Kits and bundles

A kit's Average Cost is the total Average Cost of its components, multiplied by how many of each component the kit contains. It updates automatically whenever a component's Average Cost changes, or when you change the kit's components.

For example, a kit made of 2 × Mug (£3.00 each) and 1 × Gift Box (£1.50) has an Average Cost of £7.50.

Changing the Average Cost manually

If a product's Average Cost is wrong, an account admin can overwrite it:

Open the product and go to the Additional Information tab.
Click the edit icon next to Average Cost.
Enter the New Average Cost (ex VAT) and the tax rate. StoreFeeder works out the New Average Cost (inc VAT) for you.
Click Overwrite.

Once you've saved, an information icon appears next to the Average Cost to show it was set manually. For a product that's on a purchase order, the value you entered becomes the new starting point, and later deliveries are averaged in from there.

Warning: Overwriting the Average Cost also recalculates the product's Total Stock Value. If any of your pricing profiles use the Average Cost or Average Cost Ex VAT tokens, your listing prices may change too. If the product isn't on a purchase order, your manual Average Cost is replaced with the supplier cost price the next time you change that cost or make a stock adjustment on the product page.

Only admins can overwrite the Average Cost, and you can't overwrite it on kit products or on the parent of a variation product.

Things to watch for

Adding a product to a purchase order changes how its Average Cost is worked out. From then on, changing the supplier cost price no longer updates it, even if the purchase order hasn't been delivered yet.
Check purchase order prices before booking in. The Average Cost is calculated from the price on the purchase order when the stock is booked in. If you correct a purchase order price after booking in, StoreFeeder doesn't recalculate the stock you've already booked in. Overwrite the Average Cost instead.
Currency. Average Cost is always shown in your account's default currency.
Pricing profiles. If your pricing profiles use the Average Cost tokens, any change to the Average Cost may change your listing prices.

Still stuck? Contact StoreFeeder support with your account name, the SKU of the product, the Average Cost you expected and the one StoreFeeder is showing, and the purchase order numbers of any deliveries you've booked in for that product. This lets our team trace exactly how the figure was calculated.