Including freight-in costs to the price of inventory!

hunterxpm
Shopify Partner
4 0 1

Not sure if this is the right board for this question, but I'm looking to find the best way to calculate freight-in costs into the price of my incoming inventory. To explain a little more in-depth, once my freight arrives, the total cost is $100 and it has 10 items in it. I then assign the cost of freight to each of those items ($100/10 = $10 per item). So then each item will be item cost + $10. 

 

Any feedback or direction would be helpful!

Replies 2 (2)

ChrisBT
Shopify Partner
1 0 1

It's been a while since you asked this question but I'm going to respond for people who might read this later.

 

I would personally not include the price of freight in the cost of the item. I would put the $100 freight cost as an expense in my books. Why? You'll pay freight when it arrives not when all your items sell. So freight is an expense for that month.

 

Also, it's more likely that your freight price will change in the future than the cost of your item (freight might be calculated differently depending on weight and size) so having to change the cost every time you receive inventory for that item would be inefficient. 

goco19
Visitor
1 0 0

Hi Chris, thanks for this recommendation! I was also including freight cost in my products' costs. I can see where it will be better to keep it separated from the actual product cost. I just started using the new Purchase Order feature for receiving inventory. I find it very helpful to have the shipping and discounts fields available, but I am wondering what you think about the discounts being reflected in the cost of the item. Adding a discount in that field does not appear to adjust the cost of the item. How would you account for the discount, from an accounting perspective?

 

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