Shopify inventory valuation and cost of goods sold at month-end

Updated 28 October 2026 · By Senoussi, developer of True COGS at Nexus Logic Systems

Short answer

Cost of goods sold for a month = opening inventory at cost + purchases − closing inventory at cost. Shopify's Month-end inventory value report multiplies the quantity on hand by each variant's Cost per item, so it is only as right as that field, and Shopify keeps Cost per item fixed when stock is received. For a month-end figure you can give an accountant, record what each delivery cost when it arrives, keep the cost per item at the weighted average or FIFO cost, and close the month from those records.

The COGS formula

cost of goods sold = opening inventory + purchases − closing inventory

Illustrative figures. Both inventory values must be at cost, on the same costing method.
Example month	At cost
Inventory on the 1st	$16,000.00
+ Purchases received during the month	$3,100.00
− Inventory on the last day	$15,500.00
= Cost of goods sold	$3,600.00

Everything rests on the two inventory values. Each is quantity on hand × cost per unit, on that date.

What Shopify's inventory and profit reports use

Month-end inventory value totals on-hand inventory on products with a cost per item, and its Total inventory value column is the cost per item multiplied by the ending quantity amount for each product variant option (Shopify Help, inventory reports). Since 1 October 2026 that quantity is On hand (available + committed + unavailable), not Available, so a sheet or app that counts Available now shows a different total: why the report doesn't match your app, and how to reconcile it.
Profit reports count profit only for products and variants that had cost recorded at the time they were sold (Shopify Help, profit reports).
Cost per item itself stays fixed when you receive a purchase order or transfer (Shopify Help).

So Shopify's reports multiply correctly; the risk is the input. If Cost per item still shows a price from three deliveries ago, the month-end value and the month's profit both carry that old price. See how far off it gets.

Why your two COGS figures don't match

A store has two honest ways to get cost of goods sold, and they rarely agree:

From sales: each order line × the cost recorded at the time of sale. This is what profit reports add up. It only counts units sold with a cost.
From inventory: opening + purchases − closing. This counts everything that left: sales, but also breakage, theft, samples, giveaways and counting errors.

The gap between them is your shrinkage plus any sales that had no cost. It is worth looking at every month, and it is the figure your accountant will ask about.

A month-end routine that holds up

During the month: record the price of every delivery when it arrives, including freight and duty (landed cost per unit), and keep Cost per item at the weighted average or FIFO cost.
On the last day: take the closing value: quantity on hand × cost per unit for every variant.
Purchases: add up what you received during the month, at cost.
Work out COGS with the formula, and compare it with the sales-side figure. Explain the gap.
Freeze the month. Keep the figures and the method you used. A cost corrected later belongs in the month it was found, not in a month already reported.

How True COGS closes a month

Every delivery's cost is recorded with its date, so inventory value at what you paid is available from the records (free plan).
Gross profit and margin use the cost each unit really had (free plan).
On paid plans, a month-end close fixes opening stock, purchases, revaluations, cost of goods sold and closing stock for the month, and can be checked again later against the records.

Questions merchants ask

How do I calculate cost of goods sold for my Shopify store?

Opening inventory at cost + purchases received − closing inventory at cost. Example: $16,000 + $3,100 − $15,500 = $3,600.

Does Shopify have an inventory valuation report?

Yes. Shopify's Month-end inventory value report multiplies the ending quantity of each variant by its Cost per item. Since 1 October 2026 that quantity is On hand, which includes units committed to unfulfilled orders, not Available. It is only as accurate as Cost per item, which Shopify keeps fixed when stock is received.

Why doesn't my Shopify profit report match my COGS?

Profit reports add up the cost recorded on each sale. The inventory formula counts everything that left stock, including shrinkage and items sold without a cost. The difference is worth reviewing each month.

What cost should inventory be valued at?

At cost, on one consistent method: weighted average or FIFO. Not at selling price, and not at the newest purchase price.

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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