FIFO Inventory(FIFO)
TL;DR
First-In, First-Out: an inventory costing method that values the parts you sell at the cost of the oldest lot still in stock.
FIFO (First-In, First-Out) is one of three common inventory costing methods (alongside LIFO and weighted-average). Under FIFO, when you sell a part, the cost recorded is the cost of the earliest-purchased lot that's still in stock.
For repair shops, FIFO matters because part prices change. If you bought 10 iPhone 14 screens at $42 six months ago and then 10 more at $48 last week, FIFO ensures the next sale records a $42 COGS — not a blended average that hides margin compression.
Average-cost systems (used by most cheaper repair-shop platforms) blur this signal. You won't know when your margins are eroding until you do a year-end count.
Quick answers
What's the difference between FIFO and LIFO?
LIFO (Last-In, First-Out) records the cost of the newest lot when you sell. It's rare in retail and usually used for tax optimization in inflationary environments. Most shops should use FIFO.
Does FIFO affect my taxes?
Yes — it affects your reported cost of goods sold (COGS) and therefore taxable income. Talk to your accountant before switching methods.