All the materials and finished products sitting in your studio represent real money, and that value matters beyond your own curiosity. Tax filing often needs it, insurance is based on it, and it's part of knowing what your business is actually worth. Valuing your inventory isn't hard, but it has to be done on cost, consistently.
Value it at cost, not retail
Inventory is valued at what it cost you, not what you'd sell it for. A candle you'd sell for $20 but that cost $6 to make counts as $6 of inventory. Counting it at retail overstates your value and can distort your taxes. Use your true cost (or material cost for raw supplies) as the basis.
Count both materials and finished goods
- Raw materials: valued at what you paid for them.
- Finished products: valued at what they cost you to make.
- Work in progress: partially-made goods, valued at the cost so far (if significant).
Do it on a schedule
- Count what you hold (a year-end count is the usual time).
- Multiply each item by its cost.
- Total it for materials, finished goods, and WIP.
- Keep the record. Your accountant and insurer will want it.
Your inventory's value is what it cost you to sit there. Count it at cost, and count it consistently.
Have the number ready
Valuing inventory by hand at year-end is a slog if your costs and counts aren't already tracked. Keepsel keeps a cost on every material and product and tracks the materials you hold, and from the Maker plan your finished stock too, so your inventory value is something you can pull when taxes, insurance or a curious moment calls for it, not reconstruct from receipts.