How do small businesses keep track of inventory for free?

Last updated: March 2026

You’ve got products to make and orders to fill. Stopping to count stock or rebuild a spreadsheet formula feels like the last thing you have time for. But if you don’t know what materials you have on hand, you’ll run out mid-batch — or worse, you’ll tie up cash buying supplies you already have sitting on a shelf.

The good news: you don’t have to spend money to start tracking inventory properly. The bad news: “free” isn’t always actually free once you count the hours you’ll spend maintaining it.

Here’s an honest look at each option.

Why tracking inventory matters even when you’re just starting out

Most makers wait too long to start tracking. The typical story goes: “I’ll sort out proper tracking once I’m bigger.” Then the business grows, the chaos compounds, and untangling a year of guesswork becomes a bigger job than if you’d started properly on day one.

There’s a real cost to winging it. If you don’t know what a product costs to make, you can’t price it profitably. If you don’t know how much material you have, you’ll either run out mid-order or over-buy and sit on dead stock. And at tax time? Without accurate inventory records, calculating your cost of goods sold becomes a nightmare — or an expensive accountant problem.

The good news is you don’t need fancy software to get started. A notebook works. A Google Sheet works. The key is actually using something consistently, rather than waiting until you have the perfect system.

Method 1: Pen and paper

A notebook, a clipboard, or a whiteboard — this is where most makers start. And for day one, it’s genuinely fine.

You write down what you buy. You cross off what you use. You count remaining stock when you’re packing orders. Simple, tangible, free.

Where it works: If you have 10 or fewer materials, sell from a single channel, and make one or two product types. A candle maker with three wax variants and a handful of fragrance oils can manage this reasonably well.

Where it breaks down — and fast:

The moment you scale past a handful of SKUs, paper becomes the enemy. There’s no way to know how much material a batch of 20 candles will consume without doing the math yourself, every single time. No alerts when beeswax drops below a week’s supply. No way to quickly answer “do I have enough supplies to fulfill this wholesale order?” without digging through pages of notes.

Worse: if you spill something on your notebook, leave it at the market, or skip updating it during a busy week, your “records” become worse than useless — they’re actively misleading.

And when it’s time to file your taxes? Pen and paper gives you nothing for COGS calculation. You’re back to a pile of receipts and a calculator.

Honest verdict: Start here if you must, but plan to move on. Paper tracking is fine for a month, not a year.

Pros:

• Zero cost, zero setup time
• No technology required
• Fast to start

Cons:

• No real-time visibility — you only know what you’ve written down
• No backup (fire, flood, coffee spill, and your records are gone)
• Can’t calculate COGS automatically
• No low-stock alerts
• Impossible to scale beyond very simple inventories
• Can’t share with a team member or VA

Method 2: Spreadsheets (Excel or Google Sheets)

Spreadsheets are the dominant choice for early-stage makers. About half of Craftybase customers used Excel or Google Sheets before switching — which tells you both that spreadsheets are genuinely useful and that they eventually stop being enough.

For simple needs, a spreadsheet works well. You can track materials, build a simple BOM (bill of materials) for each product, and update quantities as you use stock. Google Sheets is free and accessible from any device. You can share it with a partner or VA.

Robin from Messy Play Kits stretched spreadsheets further than most — tracking dozens of components across 24 different activity kits. It worked, until it didn’t. “It starts to get unwieldy,” she said. “And it starts to make less and less sense.”

That’s the typical arc. A spreadsheet that took a few hours to build becomes something that requires constant maintenance, and eventually you stop trusting the numbers in it.

The three real failure modes:

1. COGS calculation is fragile. You can build a formula to estimate cost per product, but as soon as a material price changes or you switch suppliers, you have to update every formula that touches that material. One missed cell and your COGS numbers are wrong — silently wrong. “I can’t afford to make a mistake just because of some oversight on a cell formula when we have a big contract at stake,” as one maker put it. More on why spreadsheets fail specifically for makers in our deep dive on inventory spreadsheets.

2. Multi-channel selling breaks the model. When you’re selling on Etsy, at a market, and direct from your website, your spreadsheet doesn’t know about any of those sales unless you manually update it after every single order. Forget one market sale and your material quantities are off. Skip a week and the spreadsheet is useless.

3. Real-time tracking requires discipline you won’t always have. The spreadsheet only knows what you tell it. When you’re packing orders at 11pm or rushing to fill a wholesale shipment, updating the spreadsheet is the last thing on your mind. The gap between “what the spreadsheet says” and “what’s actually on the shelf” grows, and at some point you stop relying on it at all.

For help calculating your actual cost of goods sold from your records, see our COGS guide for small businesses.

Pros:

• Free (Google Sheets) or included with most computers (Excel)
• Highly customizable to your specific products and workflow
• Familiar — most makers already know how to use it
• Easy to share with a partner or accountant

Cons:

• Manual updates required — no automatic deductions when you sell or manufacture
• COGS formulas break silently if you’re not careful
• Doesn’t connect to Etsy, Shopify, or other sales channels
• No low-stock alerts or reorder reminders
• Doesn’t scale well past ~50 materials or a few product variants
• Year-end tax prep still requires manual COGS calculation

Method 3: Dedicated inventory software

This is where most growing makers land eventually, and the honest truth is: they usually wish they’d started sooner.

Dedicated inventory software — Craftybase included — works fundamentally differently from a spreadsheet. It’s a perpetual inventory system, meaning stock levels update automatically as things happen: materials are received, products are manufactured, orders are fulfilled. You’re not manually updating a cell. The system knows.

Here’s what that looks like in practice for a soap or candle maker:

• You enter a recipe (let’s say your lavender bar soap uses 100g coconut oil, 80g lye, 50g lavender fragrance, 60g water)
• Every time you run a batch, the system deducts those exact quantities from your material stock
• When coconut oil drops below your reorder threshold, you get an alert
• When a customer orders on Etsy or Shopify, the order flows in automatically — no copy-pasting
• At year-end, your COGS is already calculated, by product, ready for your accountant or Schedule C

That last point matters more than most new makers realize. Calculating COGS accurately is legally required for product-based businesses, and it’s genuinely difficult to do correctly from spreadsheets alone.

For makers selling on Etsy specifically, tracking inventory across your listed products gets complicated fast — our guide to Etsy inventory spreadsheets covers why and when to make the switch from spreadsheets.

What Craftybase specifically does:

• Recipe costing — enter your recipe once; Craftybase calculates cost per unit automatically, and updates those costs whenever a material price changes
• Material inventory — tracks raw material stock in real-time with automatic deductions on manufacture
• Multi-channel order sync — pulls orders from Etsy, Shopify, Amazon, WooCommerce, and more automatically (no manual data entry)
• Low-stock alerts — get notified before you run out, not after
• COGS and tax reports — year-end reports that your accountant can actually use
• Batch manufacturing — track what you’ve made, what it cost, and what went into each batch

The biggest objection is usually cost. Craftybase starts at $24/month, with a free 14-day trial. For most makers, the time savings alone pay for that — if you’re spending 3–4 hours a month on spreadsheet maintenance, you’re paying more than $24/month already (just in your own time, which is worth something).

Pros:

• Real-time stock tracking — no manual updates required
• Automatic COGS calculation per product
• Connects to Etsy, Shopify, Amazon, and other channels
• Low-stock alerts so you order before you run out
• Year-end reports ready for tax time
• Scales from solo maker to growing team

Cons:

• Not free after trial (Craftybase starts at $24/month)
• Takes a few hours to set up and enter initial data
• More than you need if you have very simple inventory (5 materials, 2 products)

Side-by-side comparison

When you’re ready to graduate from free

Free methods are genuinely fine at the start. If you’re making 20 products a month from 10 materials and selling through one channel, a spreadsheet handles that.

The tipping point comes when free stops being free — in time. Watch for these signs:

• You’re selling on 2+ channels and manually reconciling them after every market day
• You have 20+ materials and regularly discover you’re out of something mid-batch
• You’ve missed a sale because you oversold a product you thought you had in stock
• Tax time takes you more than a day to calculate COGS from your records
• You don’t trust your own spreadsheet anymore — and you’re manually counting stock to verify it

When any of those happen, the “free” method is costing you more in time than paid software would cost in money. That’s the real break-even point.

Frequently Asked Questions

No single method is right for every business, and the “correct” answer changes as you grow. Pen and paper gets you started. Spreadsheets carry you through the early growth phase. Dedicated software becomes worth it the moment free is actually costing you more than it saves.

If you’re at that point — or curious whether you are — Craftybase offers a free 14-day trial with no credit card required. Takes about an hour to set up, and most makers know within that first session whether it’s the right fit.