Setting Up Products & Services in QBO: The Secret to Understanding What You Sell and How Much You Make
- Megan Rueckert
- Jul 1, 2025
- 4 min read
Updated: Dec 11, 2025
You know your sales are happening, but are they actually being recorded in your QuickBooks in a way that gives you any meaningful insight? Or are all sales being recorded as “Sales” or “Income” as a lump sum?
If you answered yes to that second question, keep reading and learn what Products & Services are, why they matter more than you think, and how to set them up the right way.
Because how you set up your Products & Services determines how much insight you get about what you actually sell, how much it costs you, and how profitable each offering really is.
It’s one of the most powerful parts of QuickBooks, and one of the most underused.
What Are Products & Services in QBO?
The Products and Services list in QBO allows you to define exactly what you sell, whether it is physical goods, digital downloads, service hours, packages, or consulting time. Think of this as your item catalog. Each sale recorded in QBO can be tied to one of these items. As well as the expenses/costs associated with that sale.
Why Your Products & Services Setup Matters
1. It gives you deeper layers of reporting detail
Every item you set up becomes a lens into your business. Instead of one big “Revenue” bucket, you get clarity about which services or products drive your business.
Which offerings are selling the most
Which ones are slowing down
Which services have the best margins
What costs are creeping up
How customer demand is shifting
This is real decision-making data but you only get it when items are structured properly.
2. It forces clarity around what you actually sell
Setting up Products & Services requires you to define your offerings:
What am I actually selling?
Are there services I always bundle together?
Do I need different versions of a service?
What deliverables or add-ons do I regularly include?
By reviewing the Products & Services that are sold, many business owners discover they’ve been offering “custom” work that really should be formalized into clear, repeatable service offerings.
3. It connects each service to its real cost
When items are mapped correctly to income accounts and COGS accounts, you finally see the real cost of delivering each offering.
That means you can identify:
material-heavy jobs
labor-intensive work
subcontractor-driven projects
high-margin or low-margin services
You cannot make strong pricing decisions without accurate costs.
4. It helps you determine whether your pricing is right
Once your Products & Services are set up properly, QBO shows you which offerings are profitable…and which aren’t.
You can see:
which services make the most money
which ones need a price increase
which offerings drain resources
whether bundled services make financial sense
A small tweak in pricing can dramatically improve your margins.
5. It helps you understand sales performance
Not all services sell equally and your profit and loss statement alone won’t tell you which offerings are most popular.
Products & Services reporting helps you see:
the most frequently purchased services
what’s trending up or down
which offerings need marketing support
which packages or bundles resonate with customers
This is how you shift from reactive to strategic decision-making.
Bonus: You can track commissions using items
If you pay team members based on what they sell, setting up Products and Services makes it easier to calculate commission payouts. Properly mapped items give you ready-to-use reporting by:
sales rep
service line
date range
No more manual spreadsheets, QBO does the heavy lifting when you invoice.
How to Set Up Products and Services in QBO
Go to Gear Icon > Products and Services
Click "New" to create a new item.
Choose the Right Type
Inventory (if you track quantities), Non-inventory, Service, or Bundle (for packages of multiple items).
Name Your Item Clearly
Be specific. For example, instead of "Consulting," use "Strategy Session - Hourly."
Assign the Right Income Account
This is the account that the sale of this product or service will be categorized under in your Chart of Accounts.
Add a Sales Price and Description
Make your life easier by pre-filling common details you use in invoices.
Use Classes to Track Revenue by Department or Location
If you want to see how different areas of your business are performing (like online vs. in-person sales), use classes to separate that data.
Tie COGS and Expense Accounts
Make sure COGS is linked so you can see gross profit for each product or service.
Set Up Commissions with Service Items
Create separate service items to track commissions paid on specific sales, and assign those to your sales team in payroll or class them separately.
Keep It Simple, But Strategic
Setting up Products & Services isn’t just a technical task. It’s a chance to get clarity about what you sell, how much it costs you, and which offerings are truly driving your business forward.
Once this list is set up correctly, QBO becomes a tool that helps you make better decisions, instead of just a place where transactions are stored.
Clear data = confident decisions.
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