An ingredient is a raw material or component you buy and then use to make something else — flour and butter for a baker, beads and wire for a jeweler, fragrance oil and wax for a candle maker, fabric and thread for a sewist. Ingredients are inputs, not the products you ultimately sell.
Ingredients carry a purchase cost, and that cost is the starting point for everything downstream. When you add an ingredient to a recipe, its cost flows into the recipe total; when you run production, the ingredient quantity is deducted from stock. Keeping ingredient costs current is what keeps your product costing and COGS honest.
The line between an ingredient and a finished good is about role, not the physical item. The same component can be a finished good in one context and an ingredient in another — which is exactly what subassemblies model when something you produce becomes an input to another recipe.
Related terms
Recipe
A defined set of ingredients, quantities, steps, and equipment needed to produce a finished good. Recipes automatically calculate production costs based on current ingredient prices.
Finished Goods
Products you have manufactured or assembled from raw ingredients and components. These are the completed items ready for sale to customers.
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.
Unit Conversion
The automatic conversion between different units of measure (e.g., pounds to ounces, cups to milliliters). Allows purchasing in bulk units and using smaller units in recipes.