によって vs 次第で
There are many ways to describe the difference between them. Let me give a picture first.
X 次第 could be explained like "depending on how X acts/becomes", or typically the cause-effect relationship is unknown, or by chance, or the result that is brought about is not clear from the first impression of X or hard to explain beforehand, or the event causer has free will so that you couldn't know before the next move, and so on.
Meanwhile, X による could be explained like "depending on what X falls under", implying each type of X automatically evokes each result, or you already have roughly grasped the rule of correspondence between X and what happens, or you can easily recognize the nature of X or classify what kind of X it is, and so on.
Of course, in most ordinary situations, the two can be used interchangeably because things are often multi-faceted; they could hardly be as different as he hit you in the jaw with his fist or you hit him in the fist with your jaw. But sometimes you cannot swap them:
The reason why you can't use による is because あなた (2nd person singular) always indicates the only person, you're not able to classify you into "what type of you". On Google.co.jp, "かはあなた次第"† has at least 425,000 hits, while "かはあなたによる" and "かはあなたによります" add up to only 15 altogether.
場合 typically stands for "categorized cases", thus it doesn't go well with uncategorized conditions of 次第. Again, Google returns 11,900,000 hits for "場合によって", but only 4,890 for "場合次第", where most of them are seemingly using the word as a synonym of 状況 "situation".
Now in this context...
If you're sure that it means:
- Depending to recipes, we use sugar. (literal translation)
- In some recipes we may use sugar. (A little more glossed)
then, I'm afraid it's not the best choice of words.
If there's a filler question,
によっては = 次第では > 次第で > によって (order of preference)
I'd like to have は because 作るもの（料理） suggests a wide variety of choices, while 砂糖を使用する is merely a yes or no. This situation gives a strong motivation for using the contrastive は, and greatly discourages using non-は versions because we expect a statement about how it changes directly after these phrases. The examples below are much better:
Although I can get the meaning of the original sentence with 次第で/によって,
in principle they're more likely to be used for other situations.
砂糖は作るものしだいで使用します。 How (much) you use sugar depends on what you make.
砂糖は作るものによって使用します。 What kind of sugar you use depends on what you make.
By the way, come to think of what you wrote:
I have always been told that 次第で（は） is always followed by something that will change -- generally an increase/decrease, or a decision/choice.
I think this is true for によって too, so I don't think it would guide you on when you should use which one.
次第 vs しだい
I think it's somewhat related to this question I answered a while ago: Why are a high proportion of basic Japanese words written in hiragana? Using hiragana instead of kanji here isn't necessarily for softening or making it childlike, but possibly because they think it's grammaticalized enough.
This "depends on; up to" sense of しだい（で）, as well as "gradually" しだいに, is clearly more used in hiragana than other uses — the original noun for "order, process, procedure" or 形式名詞 one for "what makes it how it is that; the background of; the story so far that" (e.g. 緊急事態につき、お電話差し上げた次第です。) — being more distant from its original meaning.
But there are no rigid rules, so in this case whether you use kanji or hiragana is あなた次第.
† In this link I manually excluded a keyword 信じる because there are so many results related to a book title "信じるか信じないかはあなた次第".