Costeo inteligente: FIFO, LIFO o Promedio — cuál necesita tu negocio

Many businesses don't know how much each product they sell actually costs them. They use a single purchase price — the latest one — and assume that's enough. But when a product's price rises 15% in three months, that simplification can cost you thousands in excess taxes or inflated profits.

Why the costing method matters

The costing method determines:

**How much profit you report**: Higher cost = less reported profit = less taxes

**How you value your inventory**: What the tax authority accepts in your filings

**Your pricing decisions**: If you don't know your real cost, you don't know your real margin

The 4 methods explained

1. Weighted Average (most common)

Every time you purchase, the system recalculates the average cost of your entire inventory.

Example:

You had 100 units at $10 = $1,000

You buy 50 units at $12 = $600

New average: $1,600 / 150 = **$10.67 per unit**

**Ideal for:** Products with stable prices, general commerce, most businesses.

2. FIFO (First In, First Out)

The oldest products are sold first. The cost of goods sold reflects the oldest prices.

Example:

Bought 100 at $10, then 50 at $12

Sell 80: costed at $10 (the first ones in)

Remaining: 20 at $10 + 50 at $12

**Ideal for:** Perishables (food, medicines), products with expiration dates.

3. LIFO (Last In, First Out)

The most recent products are costed first. Cost of goods sold reflects current prices.

**Ideal for:** High-inflation economies, when you want to reduce taxable income.

4. Last Cost (simplest)

All inventory is valued at the price of the last purchase.

**Ideal for:** Small businesses, products with few purchases, replacement cost reference.

Quick comparison

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How to choose

Ask yourself:

**Selling perishables?** → FIFO (mandatory for expiration control)

**Prices constantly rising?** → LIFO reduces tax burden

**Stable prices?** → Weighted Average (simple and effective)

**Few purchases per year?** → Last Cost is sufficient

**Multiple locations?** → Average is easier to consolidate

Conclusion

The costing method isn't a technical detail that only matters to accountants. It's a business decision that affects your taxes, your prices and your real profitability.

Don't know which method your current system uses? Probably none. Contact us and we'll help you set up the right costing for your business.