The SKU Mistake I Made at My First Brand

Hey there,

I need to tell you about something that happened early in my career. It changed how I think about SKUs, and honestly, it's the reason I'm so obsessed with contribution margin now.

Years ago, I was working for an outdoor products brand. Camping gear, hiking equipment, hammocks, that kind of thing. We were growing. Revenue was up. The team was excited.

And we had a lot of SKUs. I mean a lot. North of 60.

At the time, I thought that was a good thing. More products, more opportunity. More ways to capture different customers. More chances to grow.

I was wrong.

Here's what I didn't understand back then: every SKU has a cost. Not just the product cost. The operational cost. The mental cost. The opportunity cost.

Every SKU needs inventory forecasting. Every SKU needs supplier management. Every SKU takes up warehouse space. Every SKU needs to be tracked, reordered, and monitored for stockouts.

And when you have 60+ of them? You're spread so thin that nothing gets the attention it deserves.

But that's not even the worst part.

The worst part was what we found when we finally dug into the numbers.

We ran contribution margin on every single SKU. Not just gross margin. Real contribution margin. Landed cost, fulfillment, returns, the whole picture.

And what we found made me sick.

About a third of our SKUs were making real money. Healthy margins. Worth the effort.

Another third were... fine. Mediocre margins. Maybe worth keeping if we could fix something.

And the last third? They were underwater. Some of them were negative. We were literally paying to sell them.

I remember staring at that spreadsheet thinking: we've been killing ourselves to keep all these products in stock. Running around like crazy. Stressing about inventory. Managing all these supplier relationships. And a third of them are losing us money?

That was the moment it clicked for me.

More SKUs doesn't mean more opportunity. It usually means more chaos hiding more losses.

So we made some hard calls.

We put every product into one of three buckets: Kill it, Fix it, or Scale it.

Kill it: Contribution margin below 10-15%, no clear path to fix, operational headache. These had to go. Not "deprioritize." Not "revisit next quarter." Gone.

Fix it: Marginal economics, but a specific lever we could pull. Renegotiate with the supplier. Raise the price. Reduce the return rate. If there was a clear path, we'd try it.

Scale it: High margin, proven demand. These were the winners. And we'd been spreading ourselves so thin across 60 SKUs that we weren't giving these the attention they deserved.

Speaking of unit economics and the Kill/Fix/Scale framework…

I’m co-hosting a live workshop with Andrew Faris called “Your Best Seller Is Lying to You.” It’s all about this exact problem: brands celebrating revenue while their “hero” products are quietly bleeding them dry.

I’ll walk through the complete margin teardown methodology—how to calculate real contribution margin for every SKU. Then Andrew will show you how to restructure your growth strategy once you know the truth. Media buying recalibration, creative strategy by margin tier, the whole playbook.

If the story I’m telling today sounds familiar, this workshop is for you.

Killing products is hard. I won't pretend it isn't.

Some of them were products the team loved. Products we'd invested in. Products that customers occasionally raved about in reviews.

But they weren't making money. And every hour we spent managing inventory for a money-losing SKU was an hour we couldn't spend on the products that actually mattered.

There's a sunk cost trap that makes people hold on way too long. "But we already invested in all this inventory!" "But we spent so much on product development!"

Here's what I learned: The inventory is already a loss. The only question is whether you keep losing time and energy on top of it.

We ran clearance sales. Moved the dead inventory. Freed up warehouse space and mental bandwidth.

For the "fix" bucket, we actually fixed things. Renegotiated some supplier contracts. Raised prices on a few products (we were scared demand would drop, it mostly didn't). Improved some product listings to reduce returns.

And for the winners? We finally gave them the attention they deserved. More inventory depth. More marketing focus. Better supplier relationships because we were ordering more volume.

The result?

Fewer SKUs. Less chaos. Better margins. And honestly? The job got easier. Way easier.

I think about that experience all the time now. Because I see the same pattern in almost every DTC brand I work with.

Founders who are running themselves ragged managing a huge catalog. Proud of how many products they offer. Stressed about inventory for SKUs that are quietly bleeding them dry.

And when we finally run the numbers? That same look I had. That same realization: we've been killing ourselves for products that don't deserve it.

I'm telling you this because I want you to learn from my mistake. You don't have to figure this out the hard way like I did.

If you've got a big catalog and you've never run real contribution margin on every SKU... there's probably money hiding in that spreadsheet. And there are probably products you need to kill.

This is exactly what we do inside the MOVE Accelerator. The unit economics. The kill/fix/scale decisions. The hard conversations. The implementation.

If you're managing too many products and wondering why you're working so hard without the profits to show for it, this is the work.

This Week's Action

Pull up your SKU list. Just look at it.

How many products are you managing right now?

Now ask yourself: how many of those have I actually calculated real contribution margin for? Not gross margin. Real, all-in contribution margin.

If the answer is "not many" or "none," that's your starting point.

Pick your top 5 SKUs by revenue. Run the numbers. Landed cost, fulfillment, payment processing, returns, customer acquisition. See what's really happening.

I bet at least one of them surprises you.

Watch Me Break This Down

I made a quick video walking through the Kill/Fix/Scale framework. If you want to see how I actually think through these decisions, this might help.

Until next time,

Lara

P.S. If you do this exercise and realize you need to kill something you love, reply and tell me. I've been there. It's hard. But it's also the beginning of running a healthier business.

P.P.S. Next week I'm sharing another story about a brand that cut 40% of their SKUs and made MORE money. The math on that one is wild. Stay tuned.