Hi All,
Sorry to bombard you with questions but I would appreciate some advice on how to go about taking into inventory on hand goods I have created myself. I have a small jewellery business, and as part of that I create patterns I use for workshops. I will also sell the patterns if anyone wants them and they also form part of the kits. How can I take these into inventory without going through the purchase invoice route? Or do I have to effectively sell the patterns to the business to take them as inventory items. Any help or advice would be greatly appreciated.
Are these patterns actual products or just drawings/templates etc? As a comparison, a draughtsperson may create house plans which they sell to builders. These plans are never inventory or stock, but copies of a concept.
To have inventory, you have to have a cost. Is there an identifiable cost to your templates? Using the draughtsperson in a very abstract way, he could purchase raw material inventory, (pencils, pens, paper) which produce X copies of the plans. So via a “production process” they could convert the raw materials into finished goods - the plans.
Without further information your patterns sound more like intellectual property then inventory, which you would sell as a service rather then inventory.
Hi Brucanna,
The patterns are printed on A4 so there is a cost in terms of paper and ink, plus there is also the cost of developing these patterns i.e. my time so there’s also a labour cost element that also needs to be recovered.
Okay, so you need to decide how are you going to cost the patterns, i.e. what cost recovery process to use.
The actual material cost is going to be quite small, but the labour cost recovery is a different issue If you take 2 hrs @ X price, do you fully recover that on the first sale, or do spread it over, say 5 sales.
So if you value the labour at 50, does the selling price include 50 or 10. Using the draughtsperson again, they could invest 3000 labour cost into developing the plans, but may only sell them at 1000 ea.
Regardless of the costing approach you use, you would still be selling a service not inventory, so you would use Settings - Sales Invoice Item, rather then Inventory as your patterns are being manually costed rather then being purchased
Hi Brucanna,
Thanks for replying so quickly. I think I will recover the cost over several sales as I will be using the patterns more than once. I will have to estimate a sensible the number of times I will use the pattern and calculate accordingly. Thanks for your help, you’ve been great!