Introduction
This guide explains how TRAEDE handles cost prices at both variant and location levels. It covers how cost prices are calculated, how they impact inventory, and how the booked landing cost is derived. Understanding these concepts is important when working with POs, inventory valuation, and profitability tracking across multiple warehouse locations.
Use this guide to better understand how product costs behave when receiving stock, managing POs, and creating invoices.
How cost prices work in TRAEDE
Key cost price concepts
Each product variant in TRAEDE has its own cost prices:
Cost price: The base price you pay your supplier, in the supplier's currency.
Product cost: Additional costs such as shipping, customs, etc.
Total cost: Cost price + product cost.
Landed cost: Total cost converted into your base currency (e.g., DKK).
Booked landing cost: The average of the landed cost across all locations.
📌 The landed cost is what gets added to inventory when a PO is received.
📌 Booked landing cost is a weighted average across all stock-holding locations.
Example of single-location inventory
Imagine a PO with 10 pieces of a product:
Supplier cost: $100
Product cost (e.g., customs): 12.5%
Total cost: $112.5
Base currency: DKK
Landed cost: ~775 DKK
When the PO is received:
10 units are added to the main location at 775 DKK each.
The booked landing cost becomes 775 DKK (because there's only one location).
What happens with multiple locations
When inventory is received at more than one location, each location can have its own landed cost based on the PO it received.
Example:
Main location: 10 units at 775 DKK
Secondary location: 10 units at 700 DKK
Booked landing cost becomes:
(10×775)+(10×700)(10 × 775) + (10 × 700) ÷ 20 = 737.5 DKK
📌 TRADE calculates the booked landing cost as a weighted average across all locations.
Invoices and cost of goods sold
When you create an invoice, the cost is taken from the location's specific landed cost, not the booked landing cost.
Example:
If you sell 5 units from the main location, and its landed cost is 775 DKK, your cost of goods sold = 5 × 775 DKK.
If you sell 5 units from the secondary location, and its landed cost is 700 DKK, your cost of goods sold = 5 × 700 DKK.
The booked landing cost adjusts automatically based on how many units remain in each location and at what cost they were received.
Impact of new POs
When you receive a new PO at a location with a different cost price:
The landed cost of that location is updated as a weighted average of the new and existing stock.
The booked landing cost is recalculated across all locations.
Example:
Main location:
5 units remain at 775 DKK
You receive 10 more units at 700 DKK
New landed cost = (5×775)+(10×700)(5 × 775) + (10 × 700) ÷ 15 = 725 DKK
Booked landing cost updates accordingly.
Summary
| Term | Description |
|---|---|
| Cost price | What you pay your supplier (e.g., $100) |
| Product cost | Add-ons like customs, shipping, etc. |
| Total cost | Cost price + product cost (e.g., $112.5) |
| Landed cost | Total cost converted to base currency (e.g., 775 DKK) |
| Booked landing cost | Weighted average landed cost across all locations |
| Location landed cost | The only cost used when invoicing or issuing credit notes |
📌 Only the location's landed cost is used when invoicing or crediting.
📌 Booked landing cost is informational — a helpful reference average.