What is a Bill of Materials? Examples for Small Manufacturing Businesses

Here’s a question most makers don’t ask until it’s too late: what does it actually cost to make your product?

Not a rough guess. Not “materials plus a bit for my time.” The real number — every ingredient, every component, every minute of labor — added up correctly.

A bill of materials is how you get that number. It’s the foundation of honest pricing, and without one, you’re essentially setting prices in the dark.

This article explains what a bill of materials is, shows real BoM examples for soap, candle, and jewelry makers, and walks through single-level vs. multi-level BoMs so you can see how the structure changes as your products get more complex.

Last updated: April 2026

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What is a bill of materials?

A Bill of Materials (shortened to “BOM” or “BoM”) is a document that lists all the raw materials and components needed to make a single batch of your products.

Think of it as a recipe — but for your manufacturing process. It tells you exactly what goes in, how much of each ingredient, what it costs, and how long it takes to make.

For small makers, a BoM does something particularly valuable: it replaces guesswork with actual numbers. When you can see every input and its cost in one place, pricing decisions stop feeling like gambling.

The anatomy of a BoM

A BoM structure is simpler than it sounds. It’s a list of the materials you use to build your product, with quantities, costs, and notes.

What are the 4 items that make up a bill of materials?

A typical BoM includes these four things:

• The name of the raw material (plus a SKU if you have one)
• The quantity required
• The unit cost
• The labor cost

BoM notes

You can also store production notes alongside each BoM — useful when you’re documenting a process for someone else on your team, or just future-you who’s forgotten the exact method. Expanding those notes into SOPs is a natural next step once you’ve got the basics down.

Units of measurement

Both quantity and unit cost should use whatever unit of measure fits your production process.

For products made from distinct parts, that’s usually “each.” For products that need measured ingredients — like soap — it’ll be ounces, grams, or millilitres. The key is consistency. If your recipe mixes grams and millilitres (oils by weight, water by volume, for instance), our grams to mL converter for maker ingredients can help you standardise before those quantities go into your BoM.

Here’s an example of a single line item for lye in a batch of 100 soap bars:

BoM costings

Your BoM should also include the assembly labor cost.

Labor time isn’t usually part of your COGS or inventory valuation, but including it gives you a more accurate picture of your total cost per unit — and that’s what you need to set prices you can actually live with. The total cost to produce is often called your COGM (Cost of Goods Manufactured). It’s slightly different from COGS, which we explain in detail here: How to calculate your COGS.

Including packaging in your bill of materials

Packaging materials are generally not part of the BoM itself, since they’re not considered part of the product. But for small makers — where boxes, bags, and labels can represent a real cost per unit — adding them as a separate line item makes sense for pricing purposes. Just be consistent about it. If you include packaging in some BoMs and not others, your cost comparisons become unreliable.

Bill of materials examples

Now for the practical part. Let’s look at real BoM examples for different product types.

Simple widget bill of materials

Start here if you’re new to BoMs. This generic example shows the basic structure for a product made from three parts:

Product: Widget

Simple. Every material is listed, quantities and costs are explicit, and the labor is included. From here, scaling up to niche-specific examples is straightforward.

Soap making bill of materials example

Soap making is a good fit for BoMs because the ingredient quantities matter a lot — lye calculations especially. A BoM keeps your batch consistent every time, and it makes sure you’re not forgetting the cost of anything when you set your price.

Here’s a typical cold process soap BoM for a 100-bar batch:

Product: Cold Process Soap (100 bars)

Once you know the cost per bar, you can price with confidence. Most soap makers target a 3–4x markup on materials cost — but that only works if you know your actual cost per bar. Without a BoM, it’s guesswork.

Want more on soap costs? See: How much does it cost to make soap? And for keeping your soap ingredients stocked: Why soapmakers need to track inventory.

Candle making bill of materials example

Candle BoMs typically include wax, fragrance, wicks, and containers. The tricky part is fragrance load — how much fragrance oil per pound of wax — which varies by wax type and scent strength. Getting this wrong in your BoM means your costs are off before you’ve even sold a single candle.

Here’s a BoM for a batch of 24 soy candles in tin containers:

Product: Soy Candle in Tin (Batch of 24)

A $4 cost per candle is your floor. Retail pricing at $18–$24 gives you a healthy margin — but you need this BoM to know that with certainty. See also: How to manage your candle business inventory.

Jewelry making bill of materials example

Jewelry BoMs work a bit differently. You’re often dealing with small quantities of expensive materials — sterling silver, gemstones, specialty findings — where even a few cents per component adds up across a production run.

Here’s a BoM for a simple sterling silver pendant necklace:

Product: Sterling Silver Leaf Pendant Necklace

At $34.50 COGM, a retail price of $90–$120 puts you in a viable range. Without tracking each finding and chain length, it’s easy to underprice — especially when sterling silver spot prices move. See also: Best software for small jewelry inventory.

Single level BOM example — bicycle

Now let’s look at a single-level BoM for a slightly more complex product: a bicycle.

A single-level BoM means there are no sub-assemblies involved — all components are raw materials sourced directly from suppliers.

Product: Bicycle

Multi-level bill of materials example

A multi-level BoM is for situations where some components are themselves manufactured in-house — not just purchased from a supplier.

What are sub-assemblies? They’re partially assembled products: made from multiple raw materials, but used as a component in a higher-level product. A bicycle wheel is a good example — it’s made from a rim, spokes, tube, and tire, then installed into the finished bicycle.

In a multi-level BoM, these sub-assemblies are listed as their own manufactured component — with their own BoM beneath them. This lets you account for the labor and materials at each stage.

Bill of Materials for Bicycle (multi-level)

Sub-assembly (WH-06 Wheel):

The wheel BoM is manufactured separately and feeds into the bicycle BoM — letting you track labor and materials at both stages. That matters when hidden component costs are substantial.

Read more: Multilevel Bill of Materials: A Guide for Small Manufacturers

Download a free bill of materials template

Why spreadsheets hit a wall

Spreadsheets work fine when you have a handful of products. But as your range grows — and your materials list does too — a few predictable problems start to show up.

Errors propagate. One bad formula or a typo in a shared sheet can throw off costs across every product that uses that material. You might not catch it until tax time.

Updates are tedious. When a supplier raises their price, you have to find and update every BoM that uses that material manually. Miss one and your cost data is silently wrong.

No connection to actual stock. A spreadsheet BoM doesn’t know what you have on hand. It can’t flag that you’re about to run out of fragrance oil mid-batch, or tell you whether you have enough materials to fill next week’s orders.

When you hit these limits, purpose-built bill of materials software is worth a serious look. Recipe costing software designed for makers goes further still — it tracks your material costs, calculates your COGM per product, and keeps everything in sync as prices change.

Why BoMs matter for small manufacturers

Creating BoMs isn’t just a “big business” thing. For small makers, the stakes are arguably higher — tighter margins, less buffer for error.

Know your manufacturing costs and margins

This is the big one. You can’t price correctly if you don’t know your COGM. A BoM puts that number in front of you — down to the cent. And it makes the math repeatable, so next time you want to check whether a materials price increase has eaten into your margin, you don’t have to start from scratch.

Track your inventory more accurately

With a BoM, you can calculate predicted material usage against what you have on hand. That means fewer stock-outs and smarter reorder decisions. Pair it with a reorder point formula and you can set automatic triggers to restock before you run out.

Plan production more effectively

Knowing exactly what goes into each product lets you schedule production runs without last-minute material scrambles. See: Production planning and scheduling for small manufacturers.

Communicate clearly with suppliers

A BoM gives you a shareable list of what you need, making supplier conversations quicker and less prone to misunderstandings.

Spot cost reduction opportunities

When you can see every line item, it’s easier to notice where waste is happening or where a cheaper substitute might work without affecting quality.

Use it for quality control

A complete BoM tells you exactly what should go into your product. If something comes out wrong, it’s your first reference point for troubleshooting.

How manufacturing software can help

Manufacturing software — which falls under either ERP or MRP software — takes the manual work out of BoM management.

Craftybase, for example, lets you create single-level and multi-level BoMs (called “recipes”), tracks your raw material and finished product inventory in real time, and calculates your COGM and COGS automatically. When a material price changes, every BoM that uses it updates too. No hunting through spreadsheets.

If you’re selling across channels like Etsy or Shopify, it also pulls in your orders automatically — so your inventory stays current without manual entry. And because Craftybase is built specifically for small-batch makers, it doesn’t assume you have an IT team or a dedicated operations manager.

Try Craftybase free for 14 days →

Frequently Asked Questions

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