Revaluation of goods: when to change the selling price and when to change the purchase price

If incorrect cost appears in Torgsoft reports, profit goes into minus, or, conversely, becomes abnormally high, the reason is often that selling price revaluation was confused with correcting the purchase price. These are two different actions: changing the selling price affects only future revenue, while changing the purchase price affects cost, margin and financial reports. Therefore, before making corrections, it is important to understand exactly which price you want to change and why.

In trade, there are two basic concepts that must not be confused, because they directly affect the calculation of your profit:

Selling price (retail/wholesale sales price) — this is the amount the customer pays you. Changing it affects only future revenue.

Purchase price (cost) — this is the amount you paid the supplier for the goods, plus additional expenses (for example, delivery or VAT). It is the basis for calculating your profit.

Profit = Selling price – Cost.

If you simply want to add a markup or give a discount to the customer — the sales price changes. If it turns out that an incorrect purchase cost was entered into the program, or the supplier changed the price list for a new batch — then you work with the purchase price. Misunderstanding this difference leads to financial reports showing incorrect data (for example, negative profit or a 100% margin where it does not actually exist).

What the problem looks like in accounting and reports

• In analytics (for example, «Sales Profitability for the Period» or «Trade Revenue Analysis»), the «Cost» column shows zeros or incorrect amounts.

• Product profit in reports goes deeply negative or, conversely, becomes abnormally high.

• In the «Warehouse Status» form, goods are highlighted in red (this means that the current selling price is lower than the calculated cost).

• When trying to add an item to a sale, the program «freezes» or displays a warning about selling below cost.

Why incorrect cost or profit appears in reports

Reason 1. The purchase price was changed, but cost was not recalculated

The user opened an old stock receipt invoice and corrected the purchase price of the goods, but forgot to perform recalculation. In Torgsoft, cost is not recalculated instantly in all past documents in order to save system resources. Until you run the recalculation, the program will use old, no longer relevant data in reports.

Reason 2. A new batch was entered as a change to an old purchase

The supplier delivered a new batch of the same product, but at a higher price. Instead of creating a new stock receipt invoice (where the program, using the FIFO method, will correctly separate batches and their costs), the user opens an old invoice and changes the purchase price there. This breaks the history of all past profit.

Reason 3. An incorrect or zero purchase price was entered in the stock receipt

When importing goods from Excel or during manual entry, the purchase price was not specified at all (the goods were received with zero cost).

How to check where exactly the margin or cost broke

1. Check product movement: go to Warehouse → Warehouse Status, select the suspicious item and click Product Movement (or Warehouse → Product Movement). Check the Price column (this is the purchase price in stock receipt documents) and the Price list column (this is the sales price).

2. Check whether cost is present in reports: go to Analysis → Sales Profitability for the Period. If the Cost of Sales column shows zero, and the goods were not sold "into minus" (without stock availability), it means that cost has not been calculated.

Action algorithm: what to do depending on which price must be changed

Scenario 1. How to change the selling price without changing cost

If you have decided to add a markup, run a sale or adjust the storefront price, you do not need to touch cost.

1. Go to Warehouse → Warehouse Status.

2. Select the required goods (you can select several using Ctrl).

3. Click Product Sale Conditions → Change Sales Price.

4. In the window, select: Increase, Decrease or Set New Price (as a percentage or in hryvnias).

5. Click Change Price. The program will automatically create a Revaluation Act, the storefront price will change, and the margin for future sales will be calculated from the old correct purchase cost.

Scenario 2. How to correct the purchase price and restore cost 

If you really entered an incorrect purchase price in a stock receipt, it must be corrected with mandatory subsequent recalculation.

1. Find the incorrect invoice: Document → Goods Receipt (or Warehouse → Receipt List), click Edit.

2. Correct the Purchase Price field to the correct value. Save the invoice.

3. Critical step: go to Warehouse → Warehouse Status. Click Recalculate Cost → Recalculate Cost for All Goods.

4. Wait until the process is complete. After that, the program will rewrite the cost in all movement documents, and reports will start showing the correct profit.

How to prevent margin and cost from breaking again

1. Use the correct accounting method. Make sure that Settings → Parameters → Accounting uses the cost calculation method «By Supply Batches (including internal transfers)». This will allow the program to correctly calculate profit using the FIFO method: if a new batch arrives at a new price, the cost of the old goods will be written off first, and then the new ones.

2. Set up automatic recalculation: To keep cost and profit up to date every morning, set up night recalculation. Go to Settings → Scheduled Tasks → Cost Calculation tab. Set the time (for example, 01:00) and enable it.

3. Prohibit sales into negative stock: Cost is most often lost (equals zero) if a seller sold goods that are not yet in stock in the program. Go to Settings → Parameters → Accounting and set What to do if there are not enough goods in stock to Prohibit sales into negative stock.

4. Do not edit old closed periods: If you regularly close months (Analysis → Period), do not try to change purchase prices in the deep past, otherwise you will have to recalculate and re-close all periods again.

Frequently Asked Questions