Tracking Price Changes
Purchase products can have multiple prices and their prices can change often. Tracking these price changes and the actual price paid for a product is important for a number of reasons. If prices increase, you would want to know this as soon as possible and assess the impact.
- Can I bear the higher cost?
- Do I need to increases sales prices?
- Should negotiate with the current supplier or seek out new ones?
Having a good understanding of prices and the actual price paid for products is an integral part of running a successful Bar or Restaurant.
There are many sources of price change including:
- Simple price increase/decrease
- Special deal or promotion no-longer valid e.g. 10+2
- Purchasing the same same product from different suppliers with different prices
- Foreign Exchange i.e. purchasing goods from a foreign supplier and paying for those in a different currency to your home/base currency.
I have intentionally highlighted actual price paid as this is the only price that really matters*. And is what directly impacts your COGS, Gross Profit (Pour Cost) and value of stock-on-hand.
At Barsumo, we believe the best source of actual price paid is the supplier invoice and being able to capture this price and track changes is critical. This why we are building a simple yet effective check-in process that allows you to compare orders placed with their corresponding invoice(s) and make adjustments as required. These adjustments will be tracked and pertinent changes bubbled-up to your attention.
*The price at which you place an order is also important as this can help with budgeting and tracking spend. However, in the Food & Beverage industry prices can and do change often and without prior notification, hence the order price will often be different from the invoice price.
- Tracking price changes and their impact is important!
- There are many reasons for a product having different prices and without a good process in place to track price changes it can be difficult to know your true COGS and GP
- The easiest & most effective way to track price changes is to check-in invoices versus their corresponding purchase order. Barsumo makes this easy.