Inventory Costs

Manage Default Costs and Lot Costs

Valerie avatar
Written by Valerie
Updated over a week ago

The cost of an item is what you paid for it, not including shipping or fees/freight. Since your costs can change over time, Thrive assigns a cost to every unique batch of inventory that comes in. We refer to these as lot costs.  

Tracking costs by lot keeps your sales and inventory reports accurate over the long haul. Thrive keeps track of your lots on an industry-standard FIFO (first-in, first-out) basis.

Most POS systems (including all of the systems we integrate with) do not track costs by lot, so these systems provide inaccurate historical reporting when your costs change.

To manage costs efficiently, you’ll want to pay attention to your products’ default costs as well as their lot costs. Keep reading for more information about the differences between the two types of costs and how they work together:

Default Cost

The default cost is your fallback. This is what Thrive assumes you will pay for your product whenever you receive a new shipment until told otherwise. You’ll see this value in gray on the Products page.

Setting and Editing Default Costs

Default costs can be managed in several different places:

  • The Product Details page - Enter the default cost once to be used across multiple locations.

    • NOTE: Location-specific default costs can also be set for a product. To find out more, click here.

  • The Products page - Click the "Actions" button and select "Edit," as shown here:

  • Use the "Edit Variants" bulk upload tool - This spreadsheet includes the default for all locations (Column H, “Default Cost”) as well as the option for location-specific differences (e.g. “Denver Default Cost”).

Receiving inventory at a dollar amount different from your default cost will never automatically change the default itself. Historical default costs are not tracked, since you can see what you actually paid in your lot cost history (more on that below).

How Default Cost is Used

  1. If your POS system supports costs, we sync the default cost to the POS.

  2. When you go to Receive inventory on a Purchase Order, in the Edit Product panel, on the main inventory page (Actions / Add), through the mobile barcode scanner app, or on a bulk upload, we’ll suggest the default cost. If you are getting the products for a different cost though, you can enter the cost and it will be reflected on the lot cost.

  3. When you reconcile inventory quantities, editing to a higher number will automatically create a new lot using the default cost.

  4. If you sell below zero quantity, we'll use the default cost to calculate your profit and it will become the current lot cost.

  5. When you transfer inventory between locations, we’ll use the default to display “estimated cost” for each variant. 

Lot Cost

A "lot" of inventory is defined as a group of units that arrived in a given shipment. For instance, if I add a quantity of 12 to one of my products, I have added a lot that contains 12 units. The lot cost is the cost-per-unit applied to a given lot. Thrive assumes you sell inventory on a FIFO (first in, first out) basis, so your oldest available lot is always deducted first.

How to Set Lot Costs

Lot costs are applied when receiving inventory by any means. The default cost will be used or suggested if one is available. If no default cost has been set and you don’t enter a value, the lot cost will be left blank (that is, "Not set").

A product without a quantity in stock and no quantity history cannot have a lot cost, since by definition there is no lot to which a cost can be applied. These products will say "Not set" even if a default cost is in place. Simply add a quantity and you’ll see the lot cost appear.

How to See and Edit Lot Cost History

To access your lot history, click on the current lot cost in blue on the Products page

Then, use the Edit button in the top right corner to make changes. Simply type over any cost to change it (no need to backspace or delete).

When editing past lot costs, this will retroactively adjust the both the past lot cost range on the Inventory report, and the past COGS on the Product Sales report.

How Lot Costs are Used

  1. Calculating the value and profitability of your inventory on hand (see your Inventory report).

  2. Calculating the profit for each sale (see your Product Sales report).

  3. Calculating profit margins for each variant.

  4. Lot costs are maintained when transferring inventory from one location to another. If the transfer spans different lots (with different costs), those will be combined to form a new lot.

A blank or empty lot cost (displayed as “Not Set”) is not the same as having a cost of $0. It means Thrive doesn’t know what you paid for that batch of inventory, so we won’t include that lot in your report totals.

For example, suppose I sell a product for $5. The revenue for this sale is always $5, but the calculated profit depends on the lot to which the unit sold belongs.

  • If the lot cost is empty, no profit is calculated.

  • If the lot cost is $2, my profit is $3.

  • If the lot cost is $0, my profit is $5.

Special Cases


Bundle costs are derived from the current lot costs of their component products. This cost is only calculated and cannot be edited directly. If your bundle cost is incorrect, double-check the costs of each component, and the number of components used in each bundle (read more on how to manage bundles here).

Bundles do not have lots. When a bundle is sold, Thrive will calculate the cost in real-time and apply it to the sale. Bundle costs cannot be edited after a sale is made.

Inventory Tracking Disabled

If inventory tracking is disabled on a product, it will not have a quantity or lot history. The current default cost will be applied to sales. Click here to read more about the inventory tracking toggle.

Historical Sales

Your lot history begins at the moment you sign up with Thrive and import or create your inventory. To set costs for sales that occurred prior to Thrive being installed, please read Backfilling Historical Costs.

Cost Averaging

Thrive does not average costs by default. Click here to read more about the cost-averaging feature in Thrive.

Did this answer your question?