Types of prices: how does the purchase price differ from the accounting and cost price?

To effectively control finances and profit in Torgsoft, it is important to clearly distinguish between price types, as each performs its function in the "purchase — stock — sale" chain.

Here’s a detailed breakdown of basic prices in Torgsoft and tips on how not to confuse them.

Procurement Price (Supplier Price)

This is the price you actually pay the supplier for the product to obtain ownership of it.

• Where it is recorded. It is entered in the "Goods Receipt" document in the "Procurement Price" field.

• Features:

• It can be specified in foreign currency (automatically converted into national currency at the exchange rate).

• If you use VAT, the procurement price may be entered excluding VAT, with the tax added on top, or the price may already include VAT (depends on the settings).

• How not to confuse. This is the "net" price of the product in the supplier’s invoice, excluding delivery or other costs.

Accounting Price (Cost Price + Additional Expenses)

This is the extended cost of the product, showing how much this product actually cost you including all related expenses for its acquisition.

• Formula. Supplier Price + Additional Cost + Additional Procurement Cost.

• Where it is used. In the "Accounting Price Analysis" report and when calculating the retail price.

• How it is formed. You can add "Invoice Expenses" (transportation, customs, handling fees) to the incoming invoice. If the settings specify "Include in cost price," it will increase the accounting price of the product.

• How not to confuse. The procurement price is what you owe the supplier for the product. The accounting price is what the product actually cost your business by the time it reached the shelf.

Retail Price

This is the price at which the product is sold to the end consumer.

• How it is calculated. Accounting Price (or Procurement Price) + Markup (%).

• Where it is recorded. It is entered manually or calculated automatically in the incoming document and displayed on price tags and in the "Sale" form.

• Dynamics. Retail prices can be linked to the exchange rate. If the rate rises, you can automatically recalculate retail prices, maintaining the markup percentage, through the function "Retail and wholesale price calculation by markup and exchange rate".

• How not to confuse. This is the price on the store tag.

Wholesale Price

This is a special reduced price for bulk buyers or when purchasing large quantities of goods.

• How it is formed. Typically, this is Procurement Price + Wholesale Markup (which is lower than the retail price).

• When it applies:

• If the client is assigned the status "Wholesale Buyer".

• If the "Wholesale Pricing Policy" is set: for example, if the purchase is for 5 or more units, the price automatically changes from retail to wholesale.

• If the accounting center has the trade type "Wholesale".

• Feature. By default, wholesale prices do not have additional discounts (discount cards, promotions) as they are already at a minimum, although this setting can be changed.

The Main Pitfall: "Cost Price"

Confusion often arises between Procurement Price, Cost Price, and Incoming Cost Price when analyzing profits.

• Procurement Price — this is the delivery price (usually the last delivery price).

• Cost Price — this can be the last procurement price, average, or cost price of shipment batches.

• Incoming Cost Price — this is the cost of a specific unit of goods, which is written off from stock at the time of sale (it can be the same as the cost price, but not always — depends on the cost calculation method).

Why are they different?

In Torgsoft, there are different methods for calculating the cost price (FIFO, average, last procurement price).

Example (FIFO method). You bought a pen for 10 UAH, and a week later, the same one for 12 UAH. You have 2 pens in stock. When you sell the first pen, the program will write off the cost price of 10 UAH (first in — first out), even if the last procurement price is 12 UAH.

How not to get confused during control (Checklist)

1. Look in the correct reports:

•   Want to know how much you owe the supplier? Look at the Balance with Partners (it shows the Procurement Price).

•   Want to know how much you earned? Look at the Profit Analysis or Product Report for the Period. Here, profit is calculated as: Revenue — Cost Price of written off goods.

2. Check the product card. In the "Stock Status" mode, open the product card. There are separate fields for "Procurement Price", "Accounting Price", "Retail Price", and "Wholesale Price" (depending on access rights). This allows you to instantly compare all indicators.

3. Keep track of the cost price recalculation. If you changed prices in old incoming invoices or added expenses retroactively, make sure to perform the "Cost Price Calculation" (menu item Analysis — Period). Without this, profit reports may show incorrect data based on outdated prices.

4. Access rights. If you don't see certain prices (e.g., procurement prices), check role settings. Often, procurement prices are hidden from salespeople to avoid unnecessary questions or abuse.