Recipe costing for handmade products (bill of materials)

A finished product is rarely one material. It is wax plus wick plus jar plus label plus labour allowance. Treating that mix as a recipe (sometimes called a bill of materials) is how you answer: “What did this table full of candles actually cost me?”

Define the recipe in production units

List each ingredient with the quantity consumed to make one sellable unit of the finished good. If batch sizes vary, normalise: “per candle” is clearer than “per pot of wax” unless you always pour fixed batch sizes.

• Include consumables that disappear (wick tabs, pipettes) if they are material at scale.
• Exclude fixed tools unless you amortise them deliberately; most small makers keep tools in overheads.
• Version the recipe when suppliers change; keep a short note of what changed.

Roll up to retail decisions

Once each line item has a unit cost, sum them for recipe COGS. Compare to your retail price to see contribution margin-not just “I feel fine about £12.” This is the same math you need when a venue takes a percentage or when you bundle two items at a show special.

Master stock vs production stock

A clean mental model: production stock is ingredients and raw materials; master stock is what you sell on the stall. Recipes bridge the two. When you manufacture or restock finished goods, ingredients move down and finished units move up-ideally in one transaction so counts never drift apart.

See both sides in the demos: master stock and production stock.