A by-product is a secondary product derived from a manufacturing process or chemical reaction. It is not the primary product or service being produced. In the context of production, a by-product is the 'output from a joint production process that is minor in quantity and/or net realizable value (NRV) when compared with the main products'. Because they are deemed to have no influence on reported financial results, by-products do not receive allocations of joint costs. By-products also by convention are not inventoried, but the NRV from by-products is typically recognized as 'other income' or as a reduction of joint production processing costs when the by-product is produced. A by-product can be useful and marketable or it can be considered waste. For example, bran is a byproduct of the milling of refined flour, sometimes composted or burned for disposal but in other cases used as a nutritious ingredient in food or feed, and gasoline was once a byproduct of oil refining that later became a desirable commodity as motor fuel.
IEA defines "by-product" in the context of life-cycle assessment: "... main products, co-products (which involve similar revenues to the main product), by-products (which result in smaller revenues), and waste products (which provide little or no revenue)."
While some chemists treat "by-product" and "side-product" as synonyms in the above sense of a generic secondary (untargeted) product, others find it useful to distinguish the two. When the two terms are distinguished, "by-product" is used to refer to a product that is not desired but inevitably results from molecular fragments of starting materials and/or reagents that are not incorporated into the desired product, as a consequence of conservation of mass. In contrast, "side-product" is used to refer to a product that is formed from a competitive process that could, in principle, be suppressed by optimization of reaction conditions.
- Wouters, Mark; Selto, Frank H.; Hilton, Ronald W.; Maher, Michael W. (2012): Cost Management: Strategies for Business Decisions, International Edition, McGraw-Hill, p. 535.
- World Trade Organization (2004): United States - Final dumping determination on softwood lumber from Canada, WT/DS264/AB/R, 11 August 2004.
- BIOMITRE Technical Manual, Horne, R. E. and Matthews, R., November 2004