Inventory valuation (FIFO, LIFO, WAC): Definition, Formula & Why It Matters
Also called: FIFO, LIFO, Weighted average cost
Inventory valuation methods decide which costs are assigned to the items you sell. FIFO assumes the oldest stock sells first, LIFO the newest, and weighted average cost blends all purchases. The method changes your reported COGS, profit, and taxes.
Inventory valuation (FIFO, LIFO, WAC) formula
Example
Buying two units at $100 and $120 gives a weighted average cost of $110 each.
Why it matters for Reverb sellers
Most resellers use FIFO or weighted average because they match how gear actually moves and are simpler to maintain. The method changes your COGS and therefore your margins, so it should be applied consistently.
How Verbstack helps
Verbstack tracks per-item cost so your COGS and margins stay accurate however you value inventory.
Track this on every order, automatically.
- ✓ Real fees, margins, and profit on every Reverb sale
- ✓ COGS and inventory tracked for you, no spreadsheet
- ✓ Full history and a live monthly P&L
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Related terms
See this number on every order.
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