Weighted Average Cost
An item’s cost helps determine inventory value and affects other reporting metrics, such as margins. Enter an item’s initial cost when you create it, automatically update the cost to a weighted average as you receive inventory, and manually adjust the cost if it is incorrect. To stop calculating cost based on a weighted average, disable the weighted average cost feature.
Table of Contents
Understanding Item Cost in Lightspeed Retail
Review the basics of item cost and how it impacts your business. Learn why tracking item cost is important, what affects cost in Lightspeed Retail, and how weighted average cost is computed.
Adding Items
An item’s initial cost can only be entered when you first add the item to inventory. See an overview of adding items below or visit our Add Basic Items or Add an Item with Variants articles for a complete walkthrough.
- Visit the Item List in BackOffice or from the Retail POS (S-Series) app (employees with BackOffice permissions only.
- In BackOffice, click ‘Items’ and select ‘Item List’.
- In the Retail POS (S-Series) app for iOS, tap ‘Manage Items’ on the Main Menu. For the Retail POS (S-Series) app for Android, tap ‘Setup’ on the register menu, then select ‘Manage Items’.
Retail POS (S-Series) app for iOSRetail POS (S-Series) app for Android - Click 'Add New'.
- Select 'Create' under 'Basic Item' or 'Item with Variants'.
- If creating a basic item, click ‘More fields…’ to add item details.
- Fill in the item's details, including its 'Cost per Item' (basic items) or ‘Cost’ (items with variants).
- Select a save option to finish creating the item.
For a more detailed walkthrough of creating an item, visit one of these support articles:
Receiving Inventory
By default, an item’s cost automatically updates to a weighted average when you receive inventory. See a brief overview of the inventory receiving process below or visit our Update Inventory article for a complete walkthrough.
- In BackOffice, click 'Items' and select 'Update Inventory'.
- Select ‘Add/receive inventory’ from the drop-down.
- Search for an item by name or UPC and click on it.
- If the item has a negative quantity, update it to the correct quantity on hand using the ‘Count inventory’ action before receiving the item.
Learn how to update inventory quantities here.
Failure to complete step 4 will result in an incorrect quantity and cost for the item after receiving it. - Enter the 'Received Quantity', then adjust the pre-filled 'Received Unit Cost', 'Total Line Cost', and/or 'Price' if needed.
New cost automatically updates to a weighted average of the old cost and the receiving cost.
- Click ‘Receive’ to finish receiving the item.
- Get updates on the iOS or Android register to sync the new cost of the item to the register.
If you receive an error while getting updates, visit our troubleshooting guide for help.
Fixing Incorrect Costs
If you enter the wrong cost or quantity when adding or receiving inventory, fix the mistake by overriding item costs and adjusting quantities. Fix costs from the Item List if there are only a few items to edit or use Bulk Management for large quantities of items.
Overriding an item’s cost will assign the item a new cost, nullifying its existing weighted average cost calculation.
From the Item List
Fix incorrect costs from the Item List if there are only a few items to be corrected.
- From the Item List, select an item to edit.
- Click ‘Override’ next to the item’s cost.
For items with variants, ‘Override’ is located at the top of the ‘Cost’ column.
- Review the message box, then click ‘Edit Costs’.
- Enter a new per-unit cost for the item.
- Select a save option to finish editing the item.
- If necessary, use the ‘Count inventory’ action to adjust the item’s quantity.
Learn how to adjust item quantities in BackOffice here.
- If updating the item from BackOffice, get updates on the iOS or Android register to sync the new cost of the item to the register.
If you receive an error while getting updates, visit our troubleshooting guide for help.
Using Bulk Management
Fix incorrect item costs using Bulk Management if there is a large quantity of items to be corrected.
Bulk Management changes will override the weighted average cost calculations for inventory items.
- Start a new Bulk Management job.
- Select 'Update Items' and click 'Next'.
- Click 'Export your existing inventory to a CSV' and open the export in spreadsheet software.
- In the spreadsheet, delete all item rows that do NOT need to be updated.
- Update the 'Cost' and/or 'Quantity' column for remaining items on the spreadsheet.
- Follow the steps here to save the spreadsheet.
- In Bulk Management, click 'Choose File', select the updated spreadsheet, and click 'Next'.
- Map ‘Cost’ and/or ‘Quantity’ to the correct ‘CSV Headers’ and set all fields other than ‘Item UUID’ and 'Name' to ‘unassigned’.
- Click 'Next', then 'Confirm & Proceed'.
- Refresh the page to see the status of the import.
- (Optional) Check the Item List to verify the items’ updated costs and quantities.
- Get updates on the iOS or Android register to sync the new costs of the items to the register.
If you receive an error while getting updates, visit our troubleshooting guide for help.
Disabling Weighted Average Cost
If you prefer to use the last receiving cost entered to value inventory, disable weighted average cost. Then when you receive an item, its cost will update to the per-unit cost being received.
- In BackOffice, click 'Settings' and select 'Inventory'.
- Select 'Last Cost' and click 'Save'.
Now when you receive inventory, New Cost updates to the value of the Received Unit Cost field.