Introduction to Adjustments

Once you have the idea of products and materials, the next step is to understand how the stock is managed and calculated in Craftybase - this is done via a concept called Adjustments.


We'll cover

This tutorial should take approximately 17 minutes to complete.

What are Adjustments?

Craftybase is perpetual inventory software. Perpetual means that we calculate your stock on hand and inventory value constantly and in real-time (this is unlike spreadsheets or accounting programs that calculate only periodically when you manually stocktake).

All stock changes in perpetual inventory systems are recorded as adjustments. An increase in stock is a positive adjustment, and a decrease is a negative adjustment.

You won't need to add these directly most of the time - adjustments will be automatically added based on your actions.


Material and Product Adjustments

Material Adjustments and Product Adjustments are automatically created by Craftybase based on the actions you take in your account. Here's how each one works:

Material Adjustments

Adjustments for materials occur when:

  • You log an expense or purchase for a material
  • You manufacture a product that uses that material

đź“Ś Example: You purchase 10 lbs of shea butter for $100. This creates a positive material adjustment that increases your material stock and sets the unit cost. Later, you manufacture 20 bars of soap using 2 lbs of shea butter. Craftybase records a negative adjustment for the material to reduce your inventory accordingly.

Product Adjustments

Product inventory levels are adjusted when:

  • You create a manufacture to add stock of a finished product
  • You enter a customer order which removes product stock

đź“Ś Example: You manufacture 20 Lavender Soap Bars. Craftybase creates a positive product adjustment to reflect the new stock. When 3 bars are sold through your connected Etsy store, Craftybase creates a negative product adjustment, automatically removing them from your inventory.


Rolling / Moving Averages

Craftybase uses a calculation method called Weighted Average Cost for all costings. This inventory costing strategy is also known as the moving average or rolling average method. This is an accepted GAAP and IRS method of accounting for inventory and is the one most commonly used in manufacturing situations, as it effectively allows for the "pooling" of materials. The Weighted Average Cost method involves recalculating all unit costs for materials and project material costs each time any change is made to inventory levels based on the amount available in stock at each point in time.

Your costing and stock calculations are thus based exclusively on your adjustment history - this is why it is really important to ensure that this is correct and represents every change since you began tracking in Craftybase.

How to find the adjustment history

To find your Adjustment history, navigate to your Material, Product, or Variation page and click the Adjustments tab.

One of Craftybase's most useful areas is its Adjustment history: for each material and product, you can see every stock change made and when. This is handy when trying to solve any stock discrepancies between your physical and Craftybase stock levels, as you can see out-of-stock situations and costing problems on one page.

The clipboard icon represents the stock status on the date the adjustment was made. Green means that there was enough stock on hand to cover the manufacture or order, whereas a Red clipboard indicates that there was not enough stock on hand.

You'll want to review your stock adjustments on a regular basis for each material and product to ensure that you have no red clipboards and that your unit costings are all in place correctly. If you spot an issue, you'll want to review all stock changes before the problem and see if you can find the reason for it. Most problems are due to missing adjustments (i.e., a manufacture was not added on a day you made products, so orders after this time are not able to be fulfilled). You may find, however, that some costing issues are due to incorrectly entered costs for expenses.

Manual Adjustments

While most material and product adjustments are created automatically by Craftybase through purchases, manufactures, and orders, there are situations where you may need to create a manual adjustment to ensure your inventory records stay accurate.

When to Use Manual Adjustments:

  • Correcting Stock Discrepancies
  • Recording Donations or Samples
  • Damaged or Lost Inventory
  • Initial Inventory Setup

Material and Product Adjustment Categories

When creating manual adjustments in Craftybase, you’ll have the option to assign a category to help track the reason for the adjustment. These categories are especially helpful for organizing inventory activity and preparing tax-related reports such as the Schedule C.

Default Category: "Personal Use"

Craftybase includes a default adjustment category called Personal Use. This category is used to indicate any inventory — either materials or products — that has been withdrawn from your business for non-business purposes.

⚠️ Important: The “Personal Use” category is directly tied to how your Schedule C report is calculated in Craftybase.

In other words, adjustments categorized as Personal Use reduce your reported material purchases, ensuring you aren’t deducting items that weren’t used in your business operations.

Custom Categories

You can create your own adjustment categories to better track other types of inventory changes, such as:

  • Lost or Damaged
  • Donated
  • Promotional Samples
  • Internal Testing
  • Theft or Shrinkage
  • Market Display Items

These custom categories won’t affect your Schedule C totals unless specifically used for personal withdrawals, but they can provide important insight into how inventory is being used outside of regular sales and manufacturing.

Best Practices

  • Always assign the appropriate category to any manual adjustment.
  • Use Personal Use only for items that are not intended to be sold or used for business purposes.
  • Create additional categories to organize and track inventory changes unique to your workflow.

More troubleshooting guides for adjustment issues can be found here:

Have some questions?

If you have any additional questions, please get in touch, and we'll be happy to help.

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