Work-in-Progress Inventory — What It Is and Why It Matters for Makers
Work-in-progress inventory is the value of everything you've started making but haven't finished yet. Here's how to track it, calculate it, and stop flying blind on your production costs.
Last updated: March 2026
You’ve started three batches this week. One candle pour is cooling on the rack. A batch of soap is mid-cure. A set of resin pieces is still in the mold. You know roughly what materials you used — but what is any of that actually worth right now? What’s it costing you while it sits there, unfinished?
That gap — between “started” and “done” — is work-in-progress inventory. And for most small-batch makers, it’s the least-tracked number in the business.
That’s a problem. Because money locked up in WIP is money you can’t spend on new materials, can’t count as profit, and can’t accurately report at tax time.
Let’s fix that.
What is Work-In-Progress Inventory?
Work-in-progress (WIP) inventory covers anything that’s moved past raw materials but hasn’t become a finished product yet. It’s the middle stage — mid-production, mid-cure, mid-assembly.
For a candle maker, WIP might be poured-but-unscented candles waiting on fragrance oil. For a soap maker, it’s bars that came out of the mold but still need four weeks to cure before they’re saleable. For a jewelry maker, it’s pieces that are cast and polished but still need settings added.
The key point: WIP isn’t available for sale yet. It’s capital tied up in production — real money, just not liquid.
WIP is one of three main inventory categories you’ll deal with:
| Inventory Type | What it is | Example |
|---|---|---|
| Raw materials | Inputs you haven’t started using yet | Wax, lye, gemstones, resin |
| Work-in-progress | Started but not finished | Soap in cure, candles cooling, unmounted settings |
| Finished goods | Ready to sell | Labeled candle jars, packaged soap bars, complete jewelry pieces |
Each category has a different value and different implications for your cash flow and accounting.
Why WIP Inventory Matters for Small-Batch Makers
Here’s the honest version: if you don’t know what’s locked up in WIP, you don’t actually know your real financial position.
Cash flow. Every dollar sitting in WIP is a dollar you can’t use to buy more materials or pay yourself. If your WIP balance keeps climbing, it often means production is slowing downstream — orders backed up, cure times stacking up, bottlenecks you haven’t spotted yet. A growing WIP number is a signal, not just a fact.
COGS accuracy. Your cost of goods manufactured (COGM) depends on accurately tracking what you’ve put into production — materials consumed, labor, and overhead. Skip WIP and your COGM is wrong, which means your COGS is wrong, which means your profit numbers are wrong. That matters a lot at tax time.
Pricing. Makers who undercharge almost always do it because they don’t see the full cost of what’s in production. If you don’t account for the materials tied up during cure time, or the labor hours that happen before a batch is finished, your cost-per-unit is understated.
Production visibility. Tracking WIP by batch — not just product — tells you where in the production process things are sitting. That’s how you catch bottlenecks early instead of discovering them when you’re late on an order.
How to Calculate WIP Inventory Value
The standard formula for WIP inventory value is:
WIP = Beginning WIP + Manufacturing Costs Added − Cost of Goods Manufactured (COGM)
Breaking that down:
- Beginning WIP — the value of unfinished inventory you started the period with
- Manufacturing costs added — materials, labor, and overhead you put into production during the period
- COGM — the cost of goods that actually completed production and moved to finished goods
So if you started the month with $200 in WIP, added $800 in materials and labor, and $700 worth of goods completed production, your ending WIP is:
$200 + $800 − $700 = $300 in WIP at month end
That $300 sits on your balance sheet as an asset. It’s not profit, and it’s not a loss — it’s capital tied up mid-process.
For small batches, you can simplify this by tracking each manufacturing run separately: what materials went in, what labor hours you logged, and what came out as finished goods. Add up the unfinished runs at any point and you have your WIP balance.
WIP vs. Finished Goods vs. Raw Materials
It’s worth being clear about where the lines are — because mixing these up is one of the most common accounting mistakes small makers make.
Raw materials are inputs you own but haven’t used yet. The beeswax in your storage cabinet. The gemstones in your inventory tray. Until you actually start a production run, they stay in raw materials.
WIP starts the moment you begin production. You melt the wax and pour it — that’s WIP now, not raw materials. You mix the soap batter and put it in the mold — WIP. The cost of those materials moves from raw materials to WIP the moment they enter the production process.
Finished goods is where things land once they’re fully made, quality-checked, and ready to sell. The labeled candle jar. The packaged soap bar. Finished goods can be counted toward revenue when sold; WIP cannot.
The practical difference: if you need to count inventory for insurance purposes, a bank loan, or an accurate balance sheet, you can’t just count what’s on your shelf. You need to know what’s in each category — and what it’s worth.
Common WIP Tracking Mistakes
Ignoring cure time and drying time. Soap makers know this one well. A batch that came out of the mold isn’t finished goods — it won’t be for four to six weeks. If you move it to finished goods too early, you’ll overstate what you have available to sell.
Not tracking labor in WIP. If you spend three hours hand-finishing a jewelry batch that isn’t done yet, that labor cost is WIP — not just the materials. Leaving labor out of your WIP calculation understates your costs.
Using order fulfillment as a proxy. Some makers only update their inventory when an order ships. That means everything in production is invisible until it sells. You’re managing production blind.
Treating all unfinished items as the same. A batch that’s 90% complete isn’t the same as one that’s 10% complete, but many spreadsheet systems treat them identically. Knowing production stage matters when you’re forecasting what’ll be available next week.
Batch-level tracking vs. item-level tracking. For most small-batch makers, tracking WIP at the batch level (manufacturing run) is more practical than item-by-item. But either way, you need a consistent method — and you need to stick to it.
How Craftybase Tracks WIP Automatically
Craftybase handles WIP tracking as part of the manufacturing run workflow — you don’t have to calculate it manually.
When you start a manufacturing run, Craftybase deducts the materials from your raw materials inventory and adds them to the run as WIP. As the run progresses through stages, you can update its status. When you mark a run as complete, the finished goods move to your finished products inventory and the run’s costs roll up into your COGM automatically.
That means at any point, you can see:
- Which runs are active (in-progress)
- What materials are tied up in each run
- The WIP value across all active runs
- How that feeds into your overall COGS and production planning KPIs
No spreadsheet math. No manual calculations at month-end. The WIP balance is always current.
For makers who are managing multiple batches with different cure times and production stages, this is the kind of visibility that makes a real difference — not just for accounting, but for actually knowing what’s happening in your workshop.
Frequently Asked Questions
What is work-in-progress inventory in manufacturing?
Work-in-progress (WIP) inventory is everything you've started making but haven't finished yet. It sits between raw materials (inputs you own but haven't used) and finished goods (products ready to sell). For a soap maker, WIP is bars in the cure rack. For a candle maker, it's poured-but-unlabeled jars. WIP represents real capital tied up in your production process — money that's neither available to spend nor recognized as revenue.
How do I calculate WIP inventory value?
The standard formula is: WIP = Beginning WIP + Manufacturing Costs Added − Cost of Goods Manufactured (COGM). In plain terms: start with what was already in production, add the materials and labor you put in during the period, then subtract the value of everything that completed production. For small batches, tracking each manufacturing run separately — logging materials in and finished goods out — gives you the same result without the formula overhead. Craftybase does this automatically from your batch records.
What's the difference between WIP and finished goods inventory?
Finished goods are ready to sell right now — labeled, packaged, quality-checked. WIP is everything still in process: curing, assembling, drying, or otherwise not yet complete. The distinction matters for your balance sheet (they're different asset categories) and for sales forecasting (only finished goods count as available stock). Moving items to finished goods too early — like soap that hasn't finished curing — overstates your sellable inventory and can cause fulfillment problems.
Why does WIP matter for small-batch makers?
WIP directly affects three things that matter to your bottom line: cash flow (money in WIP can't be reinvested until production completes), COGS accuracy (your tax-time cost numbers depend on it), and pricing (if you don't account for WIP costs, you're likely undercharging). A rising WIP balance that doesn't resolve into finished goods is also a bottleneck signal — something in your production process is slowing down and costing you more than you realize.
Does Craftybase track work-in-progress automatically?
Yes. When you start a manufacturing run in Craftybase, the materials move from raw materials inventory to WIP automatically. As the run progresses and you mark it complete, the finished goods shift to your product inventory and the costs roll up into COGM. You can see your current WIP balance, which runs are active, and what each run is costing — without any manual spreadsheet work. It's built specifically for the way small-batch makers actually produce.
Stop guessing what's locked up in production
Craftybase calculates your WIP value automatically from your batch and manufacturing run records — so you always know what's in-progress, what it's costing, and when it'll be done. See how it works.
