Leave services and non-stock products out of Shopify inventory value and COGS
Products that are not stock (services, options, add-ons, warranties, made-to-order items) should carry no inventory value. Stores often give them a fake quantity such as 999 so they never sell out, and every one of those units is then valued as stock. In Shopify, turn off Track quantity or use Continue selling when out of stock instead of a fake count; untracked variants count as zero in inventory value. Where the count must stay, a costing app needs a way to leave the product out: in True COGS, the tag truecogs-exclude.
Why fake quantities break your numbers
- Shopify's Month-end inventory value report multiplies Cost per item by the ending On hand quantity for each variant. A service set to 999 units with a cost of $2.00 adds $1,998.00 of stock that does not exist.
- Inventory value flows into cost of goods sold: ending inventory that is too high makes COGS too low and profit too high (see how to calculate COGS).
- A costing app asks you for costs on units that were never bought, and its reports carry the same phantom stock.
A worked example
| Variants | Units | Cost | Value | |
|---|---|---|---|---|
| Real stock | $18,500.00 | |||
| Service variants at 999 units | 12 | 11,988 | $2.00 | $23,976.00 |
| Inventory value reported | $42,476.00 |
More than half of the reported stock value is placeholder units. Leaving the twelve variants out brings it back to $18,500.00.
Fixing it in Shopify
- Turn off Track quantity on products that are not stock. Shopify's ShopifyQL inventory schema counts untracked variants as zero in inventory value, and the Month-end inventory value report includes only tracked variants with a recorded cost.
- Or keep tracking and allow overselling: Shopify's Continue selling when out of stock lets customers buy after the count reaches zero, so no fake count is needed. It does not apply to Shopify POS, where staff can keep selling below zero.
- Leave Cost per item blank for pure services: variants with no recorded cost add nothing to the inventory value report. Remember that a blank cost also means no cost in profit reports for those sales.
Leaving products out in True COGS
truecogs-exclude: a Shopify product tag that leaves the product out of stock value, missing costs, profit and the month-end close. It works per product, on every variant.truecogs-no-count: keeps the product in Profit, but leaves its count out of stock value and the month-end close. Use it when the product is real but its count in Shopify is not.- Products that are not stock (Settings): lists products whose counts look like placeholders and puts the tag on with one press.
- Two limits to know: the nightly below-cost email still reads Shopify's Cost per item for tagged products, and a delivery of a tagged product with a price on its purchase order is still recorded.
Related guides
Questions merchants ask
How do I exclude a product from inventory value in Shopify?
Turn off Track quantity for it, or leave its Cost per item blank. Untracked variants count as zero in inventory value, and the Month-end inventory value report includes only tracked variants with a recorded cost.
Why is my inventory value too high in Shopify?
Often because services or options carry placeholder quantities such as 999 with a cost. Each placeholder unit is valued as stock.
Can I stop a product selling out without a fake quantity?
Yes. Turn off Track quantity, or keep tracking and choose Continue selling when out of stock. That option does not apply to Shopify POS.
Do service products belong in cost of goods sold?
Not as inventory. Services and options you never buy as stock have no inventory value; any direct cost belongs where your accountant books it.
How do I leave a product out of True COGS?
Add the Shopify tag truecogs-exclude. The product is left out of stock value, missing costs, profit and the month-end close.
What if the product is real but its count in Shopify is not?
Use the tag truecogs-no-count: the product stays in Profit, and its count is left out of stock value and the month-end close.
Try True COGS free. True COGS is an inventory costing app for Shopify by Nexus Logic Systems. It records the price you paid on every delivery (a received purchase order or a transfer), with its share of freight and duty on paid plans, keeps every price with its date, and writes your moving weighted average cost, or FIFO cost on a paid plan, to Shopify's Cost per item. It is free for up to 25 variants with a cost on record; paid plans start at $29 a month or $290 a year.
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