In short: choose FIFO for fluctuating purchase prices (trade), Standard Price for stable, calculated cost prices (manufacturing) and AVCO for bulk trade where batches get mixed. You set the method per product category via Inventory → Configuration → Product Categories → Costing Method — and never switch in the middle of a financial year.
The question comes up in every Odoo implementation, usually somewhere between the coffee and the chart of accounts: which valuation method do we choose? Odoo offers three flavours — Standard Price, Average Cost (AVCO) and FIFO — and the choice directly determines what your margin and balance sheet look like. Reason enough to sit down and think it through properly.
The three methods side by side
- Standard Price: a fixed cost price that you set on the product yourself. Purchase differences land on a separate 'price variance' account. Useful for manufacturers with stable, calculated cost prices.
- AVCO: Odoo recalculates the weighted average after every receipt. Fine for bulk trade where batches get mixed anyway, such as a wholesaler in fasteners.
- FIFO: every purchased batch keeps its own cost price until it is sold. The most accurate with fluctuating purchase prices — think timber, steel or electronics.
What does this mean for your margin?
Suppose you buy 100 units in January for 10 euros and 100 units in March for 14 euros. If you sell 50 in April, FIFO books a cost price of 10 euros (the oldest batch), AVCO 12 euros (the average) and Standard Price whatever you set at some point. Three methods, three different margins on exactly the same sale. For the tax authorities and IFRS, both FIFO and weighted average are permitted; LIFO is actually prohibited under IFRS. So the choice is mainly: what gives you the fairest picture?
Where do you set it?
The method is not set on the product but on the product category: Inventory → Configuration → Product Categories, field Costing Method. So you can vary per category — trade goods on FIFO, your own manufactured products on Standard Price.
Veelgestelde vragen
Welke kostprijsmethode is standaard in Odoo?
New product categories default to Standard Price. Check this during the implementation: for trading companies with varying purchase prices, FIFO or AVCO is usually a better fit.
Can I change the costing method later?
Technically it's possible, but never do it in the middle of a financial year: Odoo revalues the stock and you lose the reconciliation with historical figures. Always plan a change at the year-end transition, together with your accountant.
Is LIFO toegestaan in Nederland?
LIFO is prohibited under IFRS; Odoo doesn't offer it either. FIFO and weighted average (AVCO) are the common, permitted methods.
Finally
Practical tip: never switch methods in the middle of a financial year; Odoo will revalue the stock and you lose the reconciliation with your historical figures. Choose deliberately during the implementation, record the choice with your accountant and stick to it. Switching from another package? Then also read how Odoo compares to Exact, AFAS and SAP. Not sure what suits your business? Contact DAADit Group, and we'll run a scenario with your own figures.
In short: choose FIFO when purchase prices fluctuate (trade), Standard Price for stable calculated costs (manufacturing) and AVCO for bulk trade where batches mix. Configure it per product category via Inventory → Configuration → Product Categories → Costing Method — and never switch mid-year.
Every Odoo implementation reaches this question sooner or later, usually somewhere between the coffee and the chart of accounts: which valuation method do we pick? Odoo offers three flavours — Standard Price, Average Cost (AVCO) and FIFO — and the choice directly shapes your margin and your balance sheet. Worth sitting down for.
The three methods at a glance
- Standard Price: a fixed cost you set on the product yourself. Purchase differences land on a separate price variance account. Useful for manufacturers with stable, calculated cost prices.
- AVCO: Odoo recalculates the weighted average after every receipt. Fine for bulk trade where batches mix anyway, like a wholesaler in fasteners.
- FIFO: each purchased batch keeps its own cost until it is sold. Most accurate when purchase prices fluctuate — think timber, steel or electronics.
What does this mean for your margin?
Say you buy 100 units at 10 euros in January and 100 at 14 euros in March. Sell 50 in April and FIFO books a cost of 10 euros (the oldest batch), AVCO books 12 euros (the average), and Standard Price books whatever you once fixed. Three methods, three different margins on exactly the same sale. For tax purposes and under IFRS, both FIFO and weighted average are permitted; LIFO is actually prohibited under IFRS. So the real question is: which method gives you the most honest picture?
Where do you configure it?
The method lives on the product category, not the product: Inventory → Configuration → Product Categories, field Costing Method. That means you can vary per category — trade goods on FIFO, own manufactured items on Standard Price.
Frequently asked questions
What is the default costing method in Odoo?
New product categories default to Standard Price. Check this during implementation: trading companies with fluctuating purchase prices are usually better served by FIFO or AVCO.
Can I change the costing method later?
Only at a year boundary and in consultation with your accountant: switching makes Odoo revalue the stock, breaking the link with historical figures.
Is LIFO allowed?
LIFO is prohibited under IFRS and not offered in Odoo. FIFO and weighted average (AVCO) are the accepted methods.
One last thing
Practical tip: never switch methods mid-financial-year; Odoo revalues the stock and you lose the link with your historical figures. Choose deliberately at implementation, record the decision with your accountant, and stick to it. Not sure what fits your business? Get in touch with DAADit Group and we will run a scenario with your own numbers.