Average cost: why your product cost isn't a fixed number

You buy a product for €10 in January. In March you buy more at €12. In June it's €11. What's your cost?

If you're using the January price, your margins are wrong. If you're using the June price, also wrong. You need an average based on what you actually have in stock.

What is average cost?

Average cost (or moving average cost) is a way to value inventory that accounts for different purchase prices over time.

Instead of picking one price, the system calculates a weighted average based on:

• What you have on hand
• What you paid for it
• When you bought it

This gives you a more accurate cost to use for margin calculations and financial reporting.

How Stockpilot calculates it

Stockpilot shows your average purchase price based on what's currently in stock, using FIFO (first in, first out) from your most recent purchase orders downward.

If you've added landed costs to those POs (freight, duties, insurance), those are included in the average too. So you're not just seeing what you paid the supplier—you're seeing true cost.

This updates automatically as you receive new purchase orders and sell inventory.

Batch tracking for perishables

If you sell products with expiry dates, Stockpilot also supports batch tracking with best-before dates. Each batch can have its own cost, and you can track which batches need to sell first.

This is essential for food, cosmetics, supplements, or anything with a shelf life.

Why this matters

When you know your true average cost:

• Margin reports are accurate
• Pricing decisions are based on reality
• You can see if rising supplier costs are eating your profit
• Financial reporting matches what's actually happening

A fixed cost price in a spreadsheet doesn't reflect how inventory actually works. Average cost does.