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Costs We Expect To Pay

When you first examine a product the supplier gives you a cost which is the cost you expect to pay. These details are entered into the Items form as part of Setting Replenishments and Sell Prices. This cost can be split into the following components. The only parts you see when entering the details are the Cost Ex Tax and Cost Inc Tax. The other details are automatically calculated by the system and stored internally. You can use the Cost Analysis form to see a detailed breakup of these costs.

Cost Component



Cost Ex Tax (or Base Cost)

This cost is the basic cost excluding all deals, fees and taxes. This is the cost that the supplier gives as their base cost.



These are any discounts that may be given by the supplier. They can be entered directly as deals (Setting Replenishments and Sell Prices), by entering Off Invoice trading terms in Items or by entering Off Invoice trading terms in Suppliers. They can be specific dollar amounts or a percentage of Cost Ex Tax.


Nett Cost

The Cost Ex Tax less Deals.

$100 - $5 = $95

Service Fees

The service fee charged by the supplier. These fees are normally only charged by wholesalers. They can be charged as a percentage of the Nett Cost or as a fee per carton. The details are defined in the Supplier Fees section in Supplier. Service fees can use different rates based on the supplier's department, category and group (obtained from Items). See below for details on how to calculate service fee.

2% of $95 = $1.90


Similar to service fees but are subtracted not added.

1% of $95 = $0.95


The Wine Equalisation Tax is only used within the liquor industry. It is calculated as a percentage calculated on Nett Cost + Service Fees - Ullage. WET is discussed in Taxes.

29% of ($95 + $1.90 - $0.95) =   $27.83


The GST is calculated as a percentage of Nett Cost + Service Fees - Ullage + WET. GST is discussed in Taxes.

10% of ($95 + $1.90 - $0.95 + $27.83) = $12.57

Cost Inc Tax or (Invoice Cost)

This is the cost we expect to pay, including tax. This is the sum of all the above components.

$95 + $1.90 - $0.95 + $27.83 + $12.57 = $136.35

When you enter this cost you specified a location or location group because that is the way the supplier gave you the cost, for example all your stores in this region can buy the product for $136.35. In reality, there is an additional charge of freight which can be unique to each location. The freight is calculated on the Cost Inc Tax. It can be calculated as a fee per carton or as a fee per kilogram. It will differ from location to location on the basis of distance. Different freight rates can be charged based on the item's department/category/group (obtained from Items). The freight charges are set up initially in Freight. A freight code is then assigned to each Supplier. See below for details on how to calculate freight. Note, these freight charges are ex-GST.

To get a true indication of the cost of an item at the location, the system uses Landed Cost. This is basically the Cost Inc Tax less GST plus freight. (The GST is extracted because we will get a credit for it). This gives a cost which we can use as the cost of goods sold and from which we can calculate a margin.

The situation is further complicated by the fact that the system tracks deals and rebates.

Deals are subtracted from the Cost Ex Tax and then service fees and other taxes are added on.

Rebates are calculated based on Cost Inc Tax less GST.

Landed Cost + Rebates = Final Cost. Final cost is the cost we expect we will finally end up paying. It is not a guaranteed cost because if we don't claim for the rebates we won't get the money and therefore we don't get the final cost.

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