You are misunderstanding this: "Then I realized that I can do this with class tracking (which I already use) by assigning a class to each product. This is easy to handle since I do not have that many products. Classes and Product tracking seem to be essentially the same just that you probably can track products within a class."
You already have Items. You can run reports such as Item Profitability. Class Tracking is an additional cross-reference, such as Web Sales vs Storefront. Or, Different States you do business in. That provides P&L by Class, and Bal Sheet by Class.
Example: You and I are partners. We also each are a Class, along with "Admin/General." Now all financial reporting can be By Class or filtered on one Class, including the Sales by Customer Summary or Item Sales, Profitability, etc. That way, we c an see Your Cost to the operations, my cost to the operations, General costs, and Revenue by Who is bringing in the most in Sales and the better Price points, who is giving bigger discounts, write offs, etc.
Your question is simply using Items and the right Reporting. Look at the Reports menu for Sales reports, for "Jobs, Time & Mileage" reporting which is where some great item-based reports can be found.
Please see my attachment. I used Customer Type in this file, too, for great reporting differentiation by business line.
