Finished goods are the completed products you sell — the soap bars, the candles, the loaves, the prints — as opposed to the raw materials and components that went into them. They are the output of your production process and the thing a customer actually buys.
Tracking finished goods separately from ingredients is what lets your inventory reflect reality. A production run consumes ingredients and creates finished goods, so the moment you make a batch, your raw materials go down and your sellable stock goes up. A sale then draws from finished goods.
Because each finished good carries the rolled-up cost of its recipe, your finished-goods inventory also has a value — part of your total inventory valuation — and selling a unit moves that cost into COGS. Finished goods can also serve as inputs elsewhere: a finished component used inside another product is handled as a subassembly.
Related terms
Ingredient
A raw material or component purchased from vendors and used in recipes to produce finished goods. Examples: flour, beads, essential oils, fabric.
Production Run
A recorded instance of producing goods using a recipe. Deducts ingredients from inventory, adds the produced item to stock, and tracks batch/lot numbers for traceability.
Variant
A specific version of an inventory item distinguished by attributes like size, color, or scent. Each variant can have its own SKU, price, and stock level.
Subassembly
A component that is produced from raw materials and then used as an input in another recipe or assembly process. Allows multi-level bills of materials.