How do I craft better Tools in 7 Days to Die?

Solution 1:

As said above, this has changed now in Alpha 13. Now the toolsmithing skill (as Andrew mentioned) determines the quality of your tools. No longer is it random, but the quality of your tools is 6 * (Toolsmithing Skill). This allows for low quality tools at early levels, and 600 quality at skill 100. There are small variations (+/- a few) determining whether or not you are at the early or late stages of skill advancement. (For example, if you are about to hit level 10 toolsmithing, but are still level 9, instead of being 54 quality, the tools may increase to 55 or 56, then 60 once your toolsmithing actually increases.)

Solution 2:

The overall quality of the item is, as stated, dependent on your level and the following formula applies:

Quality = 10 * (Level) + random(-50, 50)

This means that at level 20, you can make an item in the range of 150-250. Weather your item is "green" or "yellow", depends on the overall quality, which is in the following quality range:

╔══════════════╦═══════════════╗
║ Quality Name ║ Quality Value ║
╠══════════════╬═══════════════╣
║ Broken       ║ 0             ║
║ Faulty       ║ 1 - 99        ║
║ Poor         ║ 100 - 199     ║
║ Good         ║ 200 - 279     ║
║ Fine         ║ 280 - 399     ║
║ Great        ║ 400 - 499     ║
║ Flawless     ║ 500+          ║
╚══════════════╩═══════════════╝

However, some items do not have a quality to them, such as e.g. the Crossbow. You can see this on the name, as it does not have any of the above modifiers attached.

As for making better items in reality, it is always best to have 5 levels or the minimum required, so if you hit the worst roll with -50, you will still make one of the quality targeted. If you have plenty material, you can of course make a couple ones and gamble. However, this can get quite costly if you are unlucky.

Solution 3:

This has changed since alpha 13, you now need to level up your toolsmithing skill.

To do that spend points on it when you level up, or craft stone axes.

If you craft axes, you can dispose of them by building a chest, transferring them to it & destroying it, or by using them as fuel/input for forges.