I would like to get away from tracking individual inventory items in QuickBooks Online and my accountant suggested Shopify since they have Shopify POS client that does this.
However from what I can see the inventory reports use the cost field from the item page instead a real weighted average cost that is calculated based on purchase orders.
Does shopify track weighted average Inventory cost (WAC) and have it available to view somewhere? (I am on the Grow plan).
Just in case anyone else has a question like this.
After testing how cost is updated after receiving a PO the answer is no. Shopify is not doing any kind of average costing that I can tell. The price seems to just be updated with the last price you paid on a PO.
Shopify’s built-in inventory reports provide the necessary raw data like purchase costs and quantities to calculate weighted average cost (WAC), but Shopify itself does not perform the WAC calculation for you. If you need to calculate WAC, you’ll need an inventory app and accounting integration that supports it.
@yourcablestore Your testing is correct: Shopify does not calculate a true weighted-average cost when inventory is received.
Full disclosure: I built an app called LandedCostSync specifically for this. Before receiving, you stage the new quantity and purchase cost in the app. When the inventory is received through Shopify’s native PO or transfer flow, it calculates:
(existing stock × existing cost + received stock × landed cost) ÷ total stock
The landed cost can include allocated freight, duty and other inbound charges, rather than just the supplier’s unit price. The resulting weighted average is written back to Shopify’s Cost per item automatically, with a full audit record.
One important limitation: Shopify still holds a single current cost per variant. This provides WAC for the stock currently on hand; it does not turn Shopify into a FIFO accounting ledger or reconstruct historical order-level COGS.
Shopify only allows you to store the last known cost per item, per variant. It can be configured to support Weighted Average Cost but you need an app or extension to track weighted average cost over time, which requires a ledger (Shopify does not maintain this natively)
Disclosure I work for Bookkeep, we originally created an inventory app because we felt for our customers who were losing stock, but we quickly realized this was a perfect extension to our power financial ledger product already six years in the making.
We let you select from two cost methods, Last Cost Received and Weighted-Average Cost (WAC), both of which are backed by Bookkeep’s ledger product.