Calculating inventory value

Your inventory value is the total cost of the items you currently have on the shelves. Shoporama calculates it automatically based on the cost prices you’ve entered, so you can easily keep track of how much capital is tied up in inventory and use that figure in your financial statements.

When you add items to inventory, you can specify a cost price (the purchase price excluding VAT). Shoporama automatically retrieves the cost price set for the product if you do not specify one yourself. The more accurately your cost prices are entered, the more accurate the inventory value will be.

Does Shoporama use FIFO or weighted average cost?

Shoporama uses a rolling weighted average cost method, not FIFO. If you’ve purchased the same item at different prices, the value is calculated based on a quantity-weighted average. See the example below.

The average is calculated only for the items currently in stock. If you sell out of an item completely, the calculation starts over the next time you restock, so old prices for items that were sold long ago do not affect the value of what’s on the shelf today.

Does the inventory value include or exclude sales tax?

The inventory value is always calculated excluding VAT. It is the cost price excluding VAT that is included in the calculation.

What about items added to inventory without a cost price?

They are included in the cost price you’ve set for the product or variant. If neither a price was recorded at the time of receipt nor a cost price for the item, it isn’t included, and the inventory value will be too low. See “Inventory Value Without Cost Price ” for instructions on how to correct this.

I just added items to inventory, but the value hasn’t changed yet

The total inventory value you see on the admin dashboard is updated overnight. Items you add to inventory today will be included starting tomorrow. We do this to avoid putting unnecessary strain on the server during the day, ensuring your store runs quickly.

How is the value calculated if I’ve changed the cost price along the way?

Shoporama calculates a weighted average based on quantity.

Example: You’ve added 10 units to inventory at 80 DKK each, and then 5 units at 70 DKK each. In total, you’ve purchased 800 + 350 = 1,150 DKK worth of inventory. The average price is (10 × 80 + 5 × 70) / 15 = 76.67 DKK. Shoporama therefore reports the inventory value as 15 × 76.67 = 1,150 DKK.

This example applies as long as all 15 units are still in stock. If you sell some of them, the average price of 76.67 DKK remains and is multiplied by the number you have left. The system does not track whether the expensive or the cheap items were sold first.

How are products with variants counted?

Inventory is managed per variant, but the inventory value is calculated at the product level. All variants of the same product are therefore combined and included in the product’s total value. See Synchronizing Inventory with Variants for more information on inventory management per variant.

I share inventory between two stores. Are the items counted twice?

No. If you share inventory between multiple stores, both stores will show the same quantity because they’re selling from the same physical shelf. However, the value is recorded in only one place: at the store where the items were actually received. The other store displays the quantity without including the value, so you can combine your stores without the same inventory being counted twice.

Do bundle packages count toward the inventory value?

Bundles do not have their own inventory value when you use the recommended setup with a shared inventory. The value is assigned to the individual products within the bundle to prevent double-counting. Read more in the article about bundles.

What happens when I issue a credit memo for an order?

When you create a credit memo, you can choose whether to return the items to inventory. If you do, the inventory level increases again, and the items are included in the inventory value at their current cost price.

Do deleted products count toward inventory value?

No. Deleted products are not included in the inventory value, even if they still have inventory records in the system.

Can the inventory value become negative?

No. If a product were to have a negative value (e.g., because more were sold than were in stock), its value is treated as 0 in the calculation, so the total inventory value never becomes negative.

Where can I see the total inventory value?

You’ll find the figure under “Inventory” in the admin panel, where it appears at the top of the page: “Your inventory is worth X DKK (excl. tax) at cost.” Keep in mind that the figure is updated overnight.

If you have any questions about the inventory value, feel free to contact us at support@shoporama.dk.