Cut the bad SKU
Community signal
Some SKUs lose money on every sale and tie up cash and attention. Cutting them can lift overall profit even as revenue dips.
In real life: A product sells steadily but at a negative true margin; dropping it removes a constant drain.
Shopify / DTCShopeeTikTok ShopLazadaExcel / Manual
Data you need
- requiredTrue profit per SKU. After every cost layer.
- optionalCash tied and effort per SKU. Context for the cut decision.
Formula
Keep or cut signal
If SKU True Profit < 0 and no strategic role, cutA clear rule beats sentiment for chronic losers.
Key insight
- Cutting a loss-making SKU can raise total profit.
- Revenue may fall while profit rises.
Action checklist
- 1Identify chronic negative-profit SKUs · easy · 20 min
Persistent, not one-off. - 2Check for a strategic role · medium · 30 min
Loss leader, bundle anchor, hero accessory. - 3Cut or fix the rest · medium · 1 day
Reprice, re-source, or drop.
Money impact · Cut a loss
Removes a recurring per-sale loss and frees the cash and effort it consumed.
Common mistakes
- Keeping a losing SKU for revenue optics.
- Cutting without checking a strategic role.
How Okiela helps
Cut/reprice action chipslive
Okiela tags negative-margin SKUs with a cut or reprice action.
Trust & sources
- Community signalSKU rationalisation is a standard operator move
Last reviewed 2026-06-22 · Confidence 3/5