Shopify Inventory Cost Report

Efficiently managing your business's profitability is no small feat. While you meticulously track marketing costs, fees, and other expenses, it's crucial not to overlook a pivotal element: inventory costs. Neglecting this aspect can throw your profitability off balance, impacting the overall financial health of your e-commerce store.   

Inventory Cost Report acts as a financial compass, ensuring your business stays on course by delivering accurate insights into inventory costs. It goes beyond mere calculations and offers valuable information for strategic pricing decisions. By incorporating factors such as competitor pricing and total inventory value, the Inventory Cost Report empowers merchants to fine-tune their pricing strategies for optimal results.

Note: Report Pundit considers inventory cost to the total amount spent on acquiring the products you sell. The formula is:

Inventory Cost = Total number of units purchased * Price per unit

Why do you need the Inventory Cost Report?

This report shows the amount you paid for each product in your inventory, with other relevant data. You gain insights to price your product right, optimize wholesale purchasing costs, calculate accurate net profits, and more. 

How to Calculate Shopify Inventory Cost 

William, owner of an electronics store, buys 10 TV sets at a standard wholesale price of $250 each.

So, his Inventory Cost is: 10*$250 = $2500 

Now let’s consider this second scenario: William buys 100 TV sets, and so his supplier offers an additional 10% bulk discount on the wholesale price.

The inventory cost this time is:

Cost of TV Set: $250

No. of Units Bought: 100

Inventory/Product Cost: $25000

10% Discount: -$2500

Inventory Cost After Discount: $22,500

Inventory Cost per Unit: $225

The inventory cost per unit is the total cost divided by the number of units. In William’s case, it’s ($22500/100) = $225.

Why You Must Track Inventory Cost

With an accurate inventory cost, you can:

• Optimize your product pricing strategy for maximized profits
• Account for covered expenses
• Anticipate market fluctuations and make pricing decisions based on demand 

What is the purpose of the Inventory Cost Report?

• Track inventory costs for accurate budgeting
• Support accounting and audit compliance
• Understand key data to calculate profits correctly
• Determine effective retail prices inclusive of business expenses, like competitor pricing

Data Fields in the Inventory Cost Report

The standard fields in this report are:

• Product Title: displays the name of the product
• Variant Title: shows variant name of the product
• SKU: the unique stock-keeping unit code of a variant 
• Product Price: the listed price of the product
• Inventory Cost: total product cost for available units in inventory. Calculated as Product Cost * Inventory
• Inventory Value: total value of the product inventory based on sale price i.e. Inventory * Product Price
• Location: location where the inventory is stored
• Collections: the product/variant’s collection 
• Product Status: Confirm if a product is ready for sale. Status options are Active (ready to sell), Draft (details need completion), or Archived (no longer for sale)

‍Quick Tip: To quickly access the report, you can use the library page’s search bar to type “Inventory Cost.”