From Raw Materials to Finished Goods — Know Your Exact Cost, No More Guesswork in Pricing

Are you facing this problem?

Mr. Hung has a small bakery in Binh Duong, making cakes for cafes. Orders are steady, and monthly revenue looks good, but at the end of the year, he couldn't understand why there wasn't any surplus money as expected. He recorded ingredients in a notebook, calculated monthly salaries for his two workers, and "lumped together" electricity costs for the oven. When a customer asked for a quote for a new cake, he set prices based on gut feeling – adding up the raw materials and then doubling it. Some cakes were highly profitable, while others lost money the more he made, and he didn't know which was which.

This is a common pain point for all small-scale production facilities: not knowing how much it truly costs to produce a product, making every decision about pricing, promotions, and wholesale orders a gamble.

What you truly want to achieve

Mr. Hung doesn't need a complex "production software." He needs a clear answer for each product: how much the raw materials cost to make one, how much labor, how much machinery — and the total cost. From there, he can set profitable selling prices, know which products to push and which to abandon. And he wants this number to automatically flow into the profit and loss report, instead of having to manually add it up every month.

How GTG CRM helps you do that

GTG CRM integrates features into a closed-loop production process, directly within the system you use for sales, inventory, and accounting:

1. Define recipes once (BOM) — for each type of cake, define the bill of materials (flour, sugar, butter... including wastage percentage) and the production steps (mixing, baking, finishing in which station, how long it takes). Anyone can follow it to achieve the correct yield and cost.
2. Set labor rates and overhead costs for each station — define it once, and all subsequent production orders will automatically calculate the correct labor and machinery costs, eliminating guesswork.
3. Create production orders, and the system automatically calculates cost of goods — select the product, recipe, and quantity; upon completion, the system calculates the unit cost of goods = (materials + labor + overhead) ÷ quantity produced. Mr. Hung sees the real numbers for each type of cake.
4. Cost of goods automatically enters accounting records (COGM) — finished products are inventoried at that cost, and the journal entry is directly posted to the general ledger, resulting in accurate profit and loss reports with no more "zero-cost" finished goods.
5. Material Requirements Planning (MRP) — the system compares inventory levels with customer orders and stock targets, suggesting what additional materials need to be purchased and how much more needs to be produced — so you don't run out of ingredients mid-production, nor tie up capital in dead stock.

See the full feature set in the article Production Management, or follow the step-by-step production setup guide to build your BOM and create your first production order.

Results you will achieve

• Informed Pricing Decisions: know the exact cost of each product, set prices to ensure profitability instead of arbitrarily doubling costs.
• Identify Profitable and Unprofitable Products: see the real cost, decide to push profitable products and cut those silently causing losses.
• Accurate Profit and Loss Reporting: cost of goods flows directly into accounting, eliminating manual calculations and discrepancies between software.
• No Ingredient Stockouts, No Dead Inventory: planning based on customer orders and stock levels ensures you buy and produce the right amounts at the right time.
• A Single Unified System: sales, inventory, accounting, and production all operate on the same data.

Frequently Asked Questions

My workshop is small, with only a few products. Do I need such complexity? Precisely because it's small, you need to know the true cost — a small error on each product, multiplied by the volume, leads to significant losses. You only need to define the recipe once for each product.

I'm currently recording recipes in Excel. Is it difficult to switch over? No. Upload your Excel/CSV file, and AI will automatically match columns for you to review and import — the transfer is fast.

Does the cost of goods automatically flow into financial reports? Yes. When a production order is completed, the cost of finished goods journal entry is posted to the general ledger, so the profit and loss report reflects the accurate figures.

What if I produce for stock and also for customer orders? Both. You can produce in advance for sale, or create a production order directly linked to a sales order for the remaining quantity.

Do I need a credit card to get started? No. You can try it for free first.

Get Started for Free with GTG CRM