Overview
Your Costing Type controls how Luminous calculates the cost of goods sold (COGS) and the unit cost of inventory on-hand. It is an account-wide setting — there is no per-product override. Changing it from FIFO to Weighted Average triggers an immediate, irreversible consolidation of your existing cost layers, so it is worth understanding exactly what happens before you proceed.
Where to find the setting
- Click your user name at the top right and choose Settings.
- Open the Inventory tab.
- Locate the Costing Type field — a dropdown showing FIFO and Weighted Average.
What happens when you switch FIFO → Weighted Average
As soon as you select Weighted Average and confirm the prompt, Luminous:
- Saves the new setting immediately. All receipts posted after this moment will use the Weighted Average strategy going forward.
- Triggers a background migration job. This job consolidates your existing cost layers so that history also reflects Weighted Average — the change is not forward-only.
What the migration job does (step by step)
- For every SKU + warehouse combination, it finds all cost layers that still have remaining inventory (i.e., stock not yet consumed).
- It calculates the blended weighted-average cost: total remaining value ÷ total remaining units across all those layers.
- It deletes the individual FIFO layers and creates one new consolidated layer carrying that blended cost and the current migration date.
- Every deletion and creation is written to the cost-layer audit trail, tagged as a Weighted Average consolidation event.
Important limits of the migration
| Scenario | What the migration does |
|---|---|
| Non-lot-tracked SKUs | Fully consolidated into a single blended layer per SKU + warehouse |
| Lot-tracked SKUs | Not consolidated. Each lot's layers are left intact. Lot-tracked products continue to maintain per-lot cost records. |
| Already-consumed layers (zero remaining qty) | Not touched — historical COGS records are unchanged. |
After the migration
- Every new receipt will update the single blended layer for that SKU (the Weighted Average recalculation happens at receive-time).
- If you frequently add costs retroactively to older shipments, you can enable Rebuild Cost Layers Nightly (also in Inventory Settings). When turned on, the system recalculates Weighted Average layers automatically each night so that late-arriving landed costs are folded into the current unit cost.
What happens when you switch Weighted Average → FIFO
No automatic migration job runs in this direction. Luminous saves the new setting and new receipts will create individual FIFO layers going forward. Your existing consolidated Weighted Average layers remain as-is; they are not split back into receipt-by-receipt layers.
The confirmation prompt
When you change the Costing Type dropdown, Luminous immediately shows a confirmation dialog:
"Changing the costing type will update calculations and can't be undone. Proceed?"
If you confirm, the change is applied and the migration job described above runs. If you dismiss or decline the dialog, nothing is saved on the backend — but note that the dropdown on screen currently does NOT revert to your original selection. It will keep showing the new value you picked until you reload the page, your account's actual Costing Type is unchanged, and reloading the Settings > Inventory page will show the correct, original value. If you're not sure which value is actually active, reload the page before taking any further action, or check the Costing Type shown in Settings > Inventory after a fresh page load.
Making the switch safely
Because the migration consolidates and replaces existing layers, there are a few practices that minimize risk:
- Timing matters. Make the change at a clean period boundary (start of month or quarter) so that your pre-switch financial reports remain consistent under the FIFO basis they were originally calculated on.
- Reconcile first. Before switching, run a Cost Layer Analysis (available on any product's Cost Layers tab) for your highest-value SKUs to record their current FIFO costs. This gives you a before-and-after reference.
- Notify your finance team. Because the blended Weighted Average cost replaces the individual receipt-level costs in your active layers, COGS on future sales will differ from what they would have been under FIFO — even for inventory that was already on hand.
- Lot-tracked SKUs need separate review. The migration does not change lot-tracked layers, so if you have both lot-tracked and non-lot-tracked SKUs, your account will have a mixed layer structure after the switch. Review lot-tracked SKU costs manually if needed.
- There is no automatic rollback. Once confirmed, the consolidation cannot be reversed by switching back to FIFO — existing merged layers are not re-split.
Frequently asked questions
Is this change account-wide or per product? Account-wide. Every non-lot-tracked SKU in your account is affected by the migration job.
Does it change historical COGS on past invoices? No. The migration only consolidates layers that still have remaining inventory. Fully consumed layers — and the COGS already recorded against shipped orders — are not altered.
How long does the migration take? The job runs in the background as a queued process. For accounts with a very large number of SKUs and layers, it may take several minutes to complete. Your account continues to operate normally during this time.
Can I enable the nightly rebuild for FIFO accounts? The nightly Weighted Average rebuild is designed for Weighted Average accounts. FIFO accounts have a separate optional setting (Nightly rebuild: FIFO multi-warehouse distribution) that redistributes layer quantities across warehouses based on actual on-hand stock — this is a different feature and does not change unit costs.