Introduction to Recipes (Bill of Materials)
Recipes is the term we use for your Bill of Materials (otherwise known as BoMs).
Recipes are essentially saved lists of the materials and amounts you use to produce your handmade products. Although not essential, they can be a real timesaver if you create the same products again and again (if you make mainly custom pieces, you might like to skip this one for now and go on to the Manufactures tutorial)
Once you've completed this tutorial, you'll be able to:
✔ Create a recipe for a product
✔ Find out how much it costs you to make your products
✔ See if you have the materials available to manufacture a product
✔ Calculate your actual profit margins
✔ See your suggested pricing per product
This tutorial should take approximately 25 mins to complete.
What are Recipes?
Recipes are reusable lists (or templates) of the materials you use in order to create your product. Recipes are used to calculate your estimated batch manufacture cost and provide pricing guidance for your products. They are not required as materials can be configured directly on manufactures, but can be useful in situations where the same material lists are used to produce products again and again. If you make one-of-a-kind pieces and don't require the pricing guidance feature, you can skip this tutorial and move directly to manufactures.
The best way to explain how Recipes work is to use a simple example.
For this example, I am a soapmaker and one of my products is a bar of Lavender Soap. My typical ingredients list is as follows:
|Ultramarine Violet Colour
You can use any combination of unit measurements for your recipe - this example uses grams, ml and teaspoon measures.
To track this in Craftybase, what we will be doing is adding each of the ingredients above into the system as a Material, and then we will link these Materials along with the quantity used to the Recipe.
Navigating to the Add Recipe form
To create the Recipe, we will be assuming that my Lavender Soap product already exists, so the first thing to do is to navigate to the Add Recipe page.
1a. You'll find this page by first navigating to your product page and then clicking on the pencil button - this should appear next to the heading called "Recipe"
2a. On the form that appears, you'll first see a field for adding a for the Recipe - this is optional as it will automatically use the name of the product if you leave it blank.
For our example, we'll let the system name this recipe automatically and leave this field as is.
2b. The next field is for any descriptions or instructions you wish to store about your recipe.
The next section on the form is for configuring details about the manufacturing of this product.
3a. The batch quantity is for setting how many sellable products you make from the Recipe.
As I don't make each bar individually, my ingredients list above produces 5 bars, so I'll enter 5 in this box.
3b. The other box in this section is your estimated manufacture time. If you wish to factor in your labor costs in the total manufacture costs for this product, then this is where you do so - this is entirely optional. Your labor cost is calculated by multiplying this time by the base hourly rate that you will have set when you first created your account - if you missed setting this or wish to change it, you can do so over on your account settings pages. Total labor costs for your batch will be shown on your product page and will also be used in the pricing guidance section - which will be explained in detail later in this tutorial.
It usually takes me around 45 mins to produce a batch of my soap, so I'll put 45 in this box.
You can use an average estimated time here - you can log exact times per batch when adding your manufactures later. It is worth being slightly pessimistic on the time it takes you to create your batch as you can then be sure that your labor costs are always fully covered in your pricing guidance.
Scrolling down, this next section is for linking the Materials you use to create your Recipe. This is an amazingly powerful part of Craftybase: this linkage not only allows you to see your material costs for the product, but tells the system exactly how much of each material you wish to decrease your stock on hand by whenever you manufacture your product.
4a. Adding an existing Material is easy: after clicking on the add material button, just type the first couple of characters of your material name in the search box. The system will then search your lists and return you a set of results to choose from. Choose the one you are after - you'll notice that this will change the form a little: you'll now see the material's quantity type appear next to the quantity box.
For my example, I already have Olive Oil in my Materials list. I type "Oil" and then choose my material from the list. My Olive Oil material is configured as grams so I will just type 164 in the quantity box.
You can add as many materials as you like to your recipe here - just keep repeating the steps above until you have built your complete ingredients list.
If you don't yet have this Material in your list, you can add it on this form without leaving the page. Instead of typing into the search box in the steps above, click the + sign that appears on the right of the search box. This will take you to a form where you can enter the new material's details, then return to the Add Material step.
For my example, I don't yet have Lavender oil in my Materials list. I open the Add Material window then click the + sign - this brings up the Add Material form. As this is covered in the Material tutorial in detail, I'll stick to entering the bare minimum details here: I'll add the name as Lavender oil and set the unit of measurement to ml. I'll leave the starting quantity as 0 as I'm planning to add an expense to account for this material stock later. In order to illustrate the pricing calculations later, I'll set the Average Unit Price to be 0.7 (per ml).
When you have linked all materials to your recipe, click the Save Recipe button to create the Recipe and return to your product page.
Deciphering your Batch Recipe
You'll now see your recipe appear on your product page - there are a couple of things of interest to note here, so let's take a closer look.
You'll see at the top, just under the Recipe heading, the quantity that this recipe makes per batch. If you need to change this you can do at any point by editing the recipe and changing the batch size.
Next, you'll see all the materials we have just added to our recipe. Each of your materials will display the name, the quantity used in the recipe, and their current stock levels - this is handy to see if it is currently possible to manufacture a batch from the ingredients you currently have on hand.
Further along in the next column is your Materials Cost . This is the total cost for each material in your recipe, using your current average unit price for the material record.
If you have configured a labor rate for the recipe, you'll see your labor totals appear in the Internal Labor row.
The very last row of your recipe table is the grand totals for your recipe. This is where you can find your total materials cost, total labor cost, and finally your total production cost for the batch.
Your total production cost is the total amount it costs you to manufacture 1 batch of this product.
After all materials have been added with average unit prices, my recipe to create 5 bars of Lavender soap has a total material cost of $7.255, a labor cost of $6.00 and a total manufacture cost of $13.25.
A little further down the page is your Pricing area. The finer details of configuring your pricing guidance are covered in a different tutorial, so we'll just concentrate on how your recipe factors into this section for now.
Your pricing guidance uses your Recipe's Total Manufacture Cost and your product Sales Quantity in order to calculate the Cost Price for your product. Your Cost Price is your base cost for producing a single sales quantity of your product before any profit margins are added.
As I sell my bars individually, my sales quantity is set to 1. My cost price for my Lavender Soap displays as $2.65, so I now know that I this is the minimum I can possibly sell my product for before I start to take a loss. Configuring my Etsy channel to use a markup of 150% gives me a pricing guidance of $6.62 which provides me with a profit margin of 56.5%.
Have some questions?
If you have any additional questions, please get in touch and we'll be happy to give you a hand.