Inventory pricing methods are the various approaches used by businesses to determine the cost of goods and materials they need to function. One such method is the Average Cost Method, which calculates the average unit cost from all purchases, including any discounts or losses due to spoilage. Another method, the First In First Out (FIFO) approach, assumes that the first items purchased are sold before newer ones. Companies may use other methods, such as Last In First Out (LIFO) and Specific Identification, depending on their needs. Ultimately, whichever method is chosen should generate a fair and accurate amount for inventory costs – so businesses can accurately price out their products and remain profitable.