The SKU That's Quietly Killing Your Margins

Welcome to Issue #1 of The Signal.

Every week I'm going to bring you one commercial insight that the best health and performance brand operators are already acting on — and most of their competitors aren't.

This week: the product in your lineup that looks fine. The one nobody flags. The one that's quietly costing you more than your obvious problems ever will.

— Vince

There's a product in your lineup right now that looks fine on paper.

It moves. It doesn't generate complaints. When someone asks how it's doing, you say "okay" — and move on to the next conversation.

That SKU is probably your biggest margin problem.

Not your worst performer. Not the obvious failure you already know about. The one that's okay. The one getting just enough resources to survive but not enough focus to win. The one quietly absorbing production runs, shelf space, marketing budget, and sales team attention — while your hero SKU sits underleveraged.

Why "Okay" Is the Most Dangerous Word in Your Portfolio

When a SKU fails outright, you cut it. Uncomfortable but clear.

When a SKU succeeds, you invest. Also clear.

Everything in the middle is where the damage happens. "Okay" SKUs create a false sense of security — and an invisible drain on the business.

Here's what "okay" usually means when you look underneath it:

→ Gross margin is below category average but not low enough to trigger a review. (Most brands only flag SKUs below a hard threshold. If you don't have one, you're flying blind.)

→ Velocity is flat but distribution is holding, so it doesn't show up as a problem.

→ It only moves on deal — promo dependence hiding a structural pricing problem. (This one is dangerous because the revenue looks real. Strip the promo dollars and often the SKU is barely breaking even.)

→ It's competing with your own hero SKU, cannibalizing instead of expanding.

→ Repeat purchase rate is low, masked by new-to-file numbers. (Your top-of-funnel is covering for a retention problem. Once acquisition slows, this SKU collapses.)

None of these show up on a top-line revenue report. They only surface when you disaggregate the data — channel by channel, margin by margin, buyer cohort by buyer cohort.

Most brands never do that work. They're too busy launching the next product.

The Portfolio Math Nobody Does

Picture a brand with six SKUs. Two drive 70% of revenue and nearly all gross margin. Two more are early-stage. One is legacy with founder attachment. The sixth is the newest launch.

On paper, the numbers look fine. The hero SKU runs at 58% gross margin. The "okay" SKU runs at 34% — but because it moves volume, nobody flags it. That 24-point margin gap, across a full production run, is often worth more in real dollars than the revenue the weaker SKU generates.

The heroes underperform because the "okay" SKUs are consuming the resources — trade spend, sales team time, production capacity — needed to make the winners dominant. The business plateaus at a revenue level that feels like momentum but is actually just complexity.

The fix isn't launching a seventh product. It's doing the math you've been avoiding.

The 8-Metric Scorecard

When I audit a portfolio, I look at eight things — no more, no less:

Every SKU gets scored. No exceptions, no politics.

The Five Decisions Every SKU Gets

Keep — strong fundamentals. Protect and maintain.

Invest — clear upside. Get fully behind it.

Fix — underperforming but salvageable with a specific intervention.

Harvest — past its window. Extract remaining margin and stop investing.

Exit — structurally unprofitable. Discontinue and reallocate everything.

The brands that make these decisions early — and actually act on them — are the ones I see two years later in a completely different position.

This week: pull your gross margin and velocity by SKU for the last six months. If you can't do that in under an hour, that's its own problem worth solving. The gap between what you assume and what's real is almost always bigger than you think — and it's costing you.