CrafterBy Glossary

Definitions of every key term used in CrafterBy. Terms are listed in alphabetical order. Each definition uses plain language and includes a brief example where helpful.

Average Cost

The weighted average cost per unit of a material, calculated as total stock value divided by total quantity in stock. Used in weighted-average inventory valuation. Example: you have 2 kg of wax at €6/kg and then buy 3 kg at €7/kg — the weighted average cost is (€12 + €21) / 5 kg = €6.60/kg. Future consumption uses this blended rate until the next purchase changes it.

Bill of Materials (BOM)

The complete list of materials, quantities, and other inputs required to produce one unit of a product. In CrafterBy, the BOM is the combination of materials, components, labour entries, and machine entries on a product record. An accurate BOM is the foundation of accurate costing.

Break-even Point

The price or production volume at which revenue exactly equals total costs, leaving zero profit. If your total cost per unit (including overhead allocation) is €12.00, your break-even selling price is €12.00. Selling above this generates profit; selling below this generates a loss.

Component

A reusable sub-assembly built from materials and/or labour that can be added to multiple products. Components let you cost and manage a recurring sub-unit in one place rather than re-entering it on every product. Example: a standard earring hook set assembled in-house and used across all earring products. When the cost of the hook changes, updating the component updates all products that use it.

Consumable

A material used in production that is difficult to attribute to a specific product because it is used in very small amounts across many products. Examples: sandpaper, polishing paste, release agent, small amounts of glue. Consumables are often included in overhead rather than tracked per product.

Cost Center

A group of machines or equipment that share overhead costs, allowing more precise overhead allocation to specific product types or production areas. Example: a CO2 laser cutter and its associated ventilation equipment might form one cost center, with costs allocated only to products produced on that machine.

Cost of Goods Sold (COGS)

The direct cost of producing the goods you actually sold in a period. COGS includes materials, labour, machine time, and overhead allocation for those specific units. It does not include selling expenses, marketing, or other non-production costs. COGS is the key figure in calculating gross profit: Gross Profit = Revenue - COGS.

Depreciation

The reduction in value of equipment over time due to use and age. CrafterBy uses straight-line depreciation to calculate machine costs: Annual Depreciation = (Purchase Price - Residual Value) / Useful Life in Years. Example: a 3D printer purchased for €1,200 with a €200 residual value and a 5-year useful life depreciates at (€1,200 - €200) / 5 = €200/year, or roughly €0.096/hour assuming 2,080 production hours per year.

Direct Cost

A cost that can be directly attributed to making a specific product. Materials used in that product, labour time spent on it, and machine time consumed by it are all direct costs. Contrast with indirect cost (overhead), which cannot be tied to a single product. Direct cost is the foundation of product costing before overhead allocation is added.

FIFO (First In, First Out)

An inventory valuation method where the oldest stock is assumed to be consumed or sold first. When material purchase prices fluctuate, FIFO means the cost of production reflects older (often cheaper) stock first. Relevant for businesses where material costs change frequently — for example, silver wire or leather hides with variable spot prices.

Finished Good

A product that has been manufactured and is ready for sale. In CrafterBy, finished goods stock increases when a production order completes. A candle that has been poured, cooled, wicked, labelled, and boxed is a finished good. Wax sitting in a bucket is raw material.

Fixed Cost

A cost that does not change with production volume. Workshop rent is a fixed cost — you pay the same amount whether you make 10 or 1,000 products in a month. Compare to variable cost (which increases proportionally with production). Most overhead is composed of fixed costs.

Gross Margin

The percentage of the selling price that remains as profit after deducting the cost of goods. Formula: Gross Margin % = (Selling Price - Cost) / Selling Price x 100. Example: a product costing €8.00 sold for €20.00 has a gross margin of (€20 - €8) / €20 = 60%. Gross margin is the primary measure of product profitability in CrafterBy's reports.

Hourly Rate

The cost assigned to one hour of labour. Set in your cost settings as the default rate applied to all labour entries on products. Represents what you want to earn (or pay an employee) per hour of production time. Can be overridden on individual products or labour tasks if you have different rates for different types of work.

Indirect Cost

A cost that cannot be directly attributed to a specific product. Also called overhead. Examples: workshop rent, electricity, insurance, software subscriptions, shared tools. Indirect costs must be allocated to products using an allocation method to ensure they are recovered in pricing.

Inventory

The stock of materials and finished goods held by your business at a given point in time. Inventory has value — it represents money that has been spent on inputs not yet converted to revenue. Tracking inventory in CrafterBy ensures you always know what you have, what it cost, and when to reorder.

Labour Cost

The cost of the time spent making a product. Calculated as: Labour Cost = Hours Worked x Hourly Rate. Labour is often the largest single cost component for artisan products and the one most commonly underestimated. Accurate labour time tracking is critical to accurate product costing.

LIFO (Last In, First Out)

An inventory valuation method where the most recently purchased stock is assumed to be consumed or sold first. Less common than FIFO or weighted average cost for craft businesses. In practice, most artisans use FIFO or average cost — LIFO is listed here for completeness.

Machine Cost

The cost of running a machine for a specific amount of time on a product. Includes depreciation (the machine wearing out over time) and electricity consumption, plus any other running costs such as consumable parts. Expressed as a cost per hour. Example: a CO2 laser cutter with €0.80/hour electricity and €1.20/hour depreciation has a machine cost of €2.00/hour.

Margin

See Gross Margin.

Markup

The percentage added to the cost of a product to arrive at a selling price. Markup is calculated as a percentage of cost (not selling price). Formula: Selling Price = Cost x (1 + Markup %). A 100% markup on a €10 cost gives a €20 selling price. Important: 100% markup produces a 50% gross margin — these are not the same number. See the Understanding Markup article for the conversion formulas.

Material

Any input purchased from a supplier and consumed in making a product — raw materials, packaging, ingredients, or components bought externally. Examples: beeswax, silver wire, vegetable-tanned leather, fragrance oil, kraft boxes, jump rings. Materials are tracked in stock and consumed by production orders.

Minimum Stock

The stock level below which an alert is triggered, prompting you to reorder before you run out. Set per material in CrafterBy based on your typical usage rate and how long the material takes to arrive from your supplier. Example: if you use 500g of wax per week and your supplier takes two weeks to deliver, a minimum stock of 1,000g ensures you always have enough buffer.

Overhead

Costs that keep your business running but cannot be attributed to a specific product. Examples: rent, electricity, insurance, software subscriptions, shared tools. Overhead must be included in product pricing to be recovered. If you only charge for materials and labour, you are not recovering your fixed costs of being in business. See the Understanding Overhead article for a full explanation.

Overhead Allocation

The process of distributing your total monthly overhead cost across the products you make. CrafterBy supports two allocation methods: per-product (each product gets an equal share) and by-labour-hours (products requiring more time get a proportionally larger share). The right method depends on how uniform your product range is. See the Overhead Allocation Methods article for details.

Pricing Model

The method used to calculate the cost per unit of a material consumed in a product. CrafterBy supports several pricing models to handle different material formats: Simple (cost per standard unit), Sheet Dimensions (cost per area of a sheet material), Weight per Length (cost per gram of wire or chain), Dimensional (volume-based, e.g. resin poured into a mould), and Unit Conversion (converting between purchase units and usage units).

Production Order

A manufacturing run — a plan and record of producing a specific quantity of a product. A production order tracks planned versus actual materials consumed, labour hours spent, and machine time used. When completed, a production order moves materials out of stock and adds finished goods to stock. Actual costs recorded in production orders feed into CrafterBy's cost reports.

Profit

What remains after all costs are deducted from revenue. Gross profit = Revenue - COGS (the direct cost of goods sold). Net profit = Gross Profit - Overhead and other non-production expenses. CrafterBy's reports show gross profit and gross margin. Net profit requires deducting overhead separately or using overhead allocation to fold it into product costs.

Purchase Order

An internal record of materials or services ordered from a supplier. Includes details such as items ordered, quantities, expected unit costs, expected delivery date, and payment tracking. When materials are received against a purchase order in CrafterBy, stock levels increase and the cost is recorded.

Raw Material

An unprocessed or minimally processed input used directly in making products. Beeswax, leather hides, silver wire, resin, and raw wool are raw materials. Finished candles, bracelets, and bags are not. The distinction matters for inventory categorisation and for understanding where in the production process your investment sits.

Reorder Point

The stock level at which you should place a new order, accounting for the supplier's lead time and your consumption rate. Formula: Reorder Point = Lead Time (days) x Average Daily Usage. Example: a material with a 5-day lead time that you use at 200g per day has a reorder point of 1,000g. When your stock falls to 1,000g, place an order immediately so you do not run out before it arrives.

Reserved Stock

Stock quantity set aside for an active production order. Reserved stock is counted in your total on-hand quantity but is not available to be allocated to other production orders. This prevents you from accidentally using materials that are already committed to a production run you have started planning.

Sales Order

A record of a confirmed sale to a customer. Records the products sold, quantities, agreed prices, and payment status. When a sales order is completed and payment recorded, the revenue appears in CrafterBy's reports. Stock of finished goods decreases when a sales order is fulfilled.

SKU (Stock Keeping Unit)

A unique alphanumeric code assigned to a product or material to identify it unambiguously in your inventory. SKUs make it easy to search, track, and refer to specific items without ambiguity. Example: CNL-SOY-200-LVN for a 200g lavender soy candle, or LTH-VEG-SIDE-1.5MM for a side of 1.5mm vegetable-tanned leather.

Stock Location

A named physical area where stock is stored. Examples: Main Workshop, Retail Display, Storage Room, Fulfilment Shelf. Stock locations help you track where specific materials or finished goods are physically held, making stocktakes and picking more efficient.

Stock Movement

Any change in stock quantity. CrafterBy records the following types of stock movement: Receipt (materials arrived from a purchase order), Consumption (materials used in a production order), Sale (finished goods shipped against a sales order), Adjustment (manual correction from a stocktake), and Waste (materials written off due to damage or spoilage). A complete movement history gives you a full audit trail for any stock item.

Template

A saved product structure — including its materials, labour entries, and machine entries — that can be applied when creating a new product. Templates reduce data entry when you make many similar products. Example: a jewellery template with standard silver wire, polishing time, and bench polisher usage can be applied to all new jewellery products and then adjusted for the specific piece.

Unit Cost

The total cost to produce one unit of a product. Unit Cost = Total Production Cost / Quantity Produced. Example: if a production run of 20 candles costs €180 in total (materials + labour + machine + overhead), the unit cost is €180 / 20 = €9.00 per candle.

Variable Cost

A cost that changes in proportion to production volume. Materials are the clearest variable cost — making more products requires more materials. Some labour is also variable if workers are paid per unit or per hour actually worked. Contrast with fixed cost, which stays constant regardless of how much you produce.

Waste Factor

A percentage added to material quantities in a product's BOM to account for offcuts, spills, spoilage, test pieces, and other unavoidable material losses. A 10% waste factor on 100g of material means you budget for 110g, ensuring your cost calculation reflects what you actually consume rather than just the net quantity used in the finished product. Example: a leather bag pattern that uses 0.8m2 of leather might have a 15% waste factor to account for panel offcuts, giving a budgeted material usage of 0.92m2.

WIP (Work-in-Progress)

Production that has been started but not yet completed. Materials have been consumed and labour has been spent, but no finished goods have been added to stock yet. WIP represents value that is tied up in the production process. In CrafterBy, an open production order represents WIP until it is marked as complete.