Here’s another Inventory feature for QuickBooks 2012 – and again this is only available in QuickBooks Enterprise Solutions. You can now set QuickBooks to update the Cost of inventory parts and assemblies when you receive them, and also the Sales Price when the Cost changes. I know quite a few people who have been looking for this kind of feature. This is a feature I really like.
Prior to this, options for automatic updates of costs and prices have been limited. If you receive an inventory part and the cost changes, you are asked if you want to update the cost field. You can turn this question off, but that applies to ALL items. If you change the cost, the sales price is not updated. This confuses people, because there is a markup preference – but that isn’t used here (only for new items).
This article was updated on 9/28/2011
So, let’s look at the improvements in QuickBooks Enterprise 2012. To start, let’s look at your Preferences. You will see several options at the bottom of the Items & Inventory preference.
For If item cost changes on a purchase you have options to Always update item cost, Never update item cost and Ask about updating item cost. You have similar options for When item cost changes.
Under that there is a Markup preference, with options Percent over Cost and Amount over Cost.
It is important to note that we are talking about Cost, not Avg Cost or Total Bill of Materials Cost. If you aren’t clear on the distinction, take a look at these two articles: Understanding QuickBooks Inventory Cost and Understanding QuickBooks Total Bill of Materials Cost.
Update Price and Cost on Receipts
For my example below I set the first two to “Ask”, and the Markup to be Amount over Cost.
Here is my test item. Note that the Markup field next to the Sales Price says $0.00 – this actually means (in this case) that I haven’t edited the item to add a specific markup that I want to use.
If I create a Purchase Order for this item and change the cost on the PO, This window will pop up:
You can see the current Cost, the new Cost, and a new Sales Price recommendation based on a calculation of the current markup (amount over cost as I selected in Preferences).
There are options to Never update the cost for this item, which is a change from before as this is remembered per item, not for all items. If I choose to update the price I can click the Edit Markup button to get a window that will let me adjust the new sales price (I’ll show this window later).
The same process occurs if I change the cost in a purchase order, item receipt or item receipt with bill. Any time that you purchase/receive an item and enter a new cost.
I’m very picky about how the program sets the default values to the yes/no questions in the Item Cost Changed window based on your preferences. So far, I think that Intuit got it right (after a fair amount of discussion in the beta testing process).
- If you select Always ask then the window opens, and the answers default to No.
- If you select Never update for the item cost option, or Always update for both the cost and sales price option, the Item Cost Changed window doesn’t open, the program just does the correct process.
- If you select Always update for the cost, but Always ask for the sales price, the Item Cost Changed window opens with the Cost question defaulting to yes and the sales price question defaulting to no.
I think that this is the best situation for most cases.
You can override the default options that you selected in Preferences by editing an item and clicking on the Edit Markup button.
I really like the ability to set preferences per item like this. I wish we had that kind of option for serial numbers and lots, too!
Is This a Good Feature?
Short answer – YES. I like this feature. However, you shouldn’t be too surprised, there are a few things I’m not happy with:
This only applies to inventory part and inventory assembly items. I would really like to see it updated to include non-inventory parts.Update: This is also available for service items, non-inventory parts and other charge items, IF you make them “two sided items”. But in R1 there is a bug with Other Charge items. See this article for details.
- The new fields aren’t available in the Add/Edit Multiple List Entries or Advanced Excel import tools.
- Note that if you use a third party tool that imports or adds items, the new fields in the Edit Markup button may not be included. At the time I’m writing this the Intuit programming interfaces that might include these fields are still in beta test.
- I would have liked to be able to specify some options on how the percentage markup handles rounding of the calculated prices.
- I wish that the updates only occurred if you saved the transaction. I can create a PO, agree to a cost or price change, but then clear the PO so it isn’t saved. The cost/price update is registered even if the transaction isn’t saved. I think that this is a serious problem in some situations. This change won’t show in the audit trail.
- There is no connection between these cost/price updates and the Price Level List feature using a Per Item price level list. If the sales price changes then the custom price in the list doesn’t change. It would take a big change in how Price Level Lists are managed in general, though, to be able to make this connection. However, it is important to note that these are not connected, so if you are using both features you have to watch how you manage your price lists.
All in all, this is a very welcome update to QuickBooks. I’m glad that it isn’t restricted to the Advanced Inventory feature – I wish it was also a available in Premier.