How to Identify Money-Losing SKUs Due to Tariffs (2026)

In e-commerce, not all products are created equal. Some are winners, driving the majority of your profits, while others are silent profit killers. These money-losing SKUs can be hard to spot, especially when hidden costs like import tariffs are not properly accounted for. This guide will show you how to conduct a SKU profitability analysis to identify which of your products are losing you money due to tariffs.

The Hidden Cost of Tariffs in SKU Profitability

SKU profitability analysis is the process of examining the financial performance of each individual product in your catalog. It goes beyond simple revenue and looks at the true profit margin of each SKU after all costs are considered. For businesses that import products, tariffs are one of the most significant and often overlooked costs.

A product might seem profitable on the surface, but once you factor in a 30% or 50% tariff, the picture can change dramatically. Without a clear understanding of your landed cost—the total cost of a product including tariffs—you could be losing money on every sale without even realizing it.

Step-by-Step Guide to SKU Profitability Analysis

Here’s how you can conduct a SKU profitability analysis to identify money-losing products:

Step 1: Gather Your Data

You will need the following data for each SKU:

• Revenue: The total sales for each SKU.
• Cost of Goods Sold (COGS): The price you paid your supplier for the product (FOB price).
• Shipping & Fulfillment Costs: The cost to ship the product from your supplier and fulfill customer orders.
• Marketing Costs: Any advertising or promotional costs associated with the SKU.
• Tariff Rate: The import duty rate for the product based on its category and country of origin.

Step 2: Calculate the Landed Cost for Each SKU

The landed cost is the true cost of your product. The formula is:

Landed Cost = COGS + Shipping + Tariffs

To calculate the tariff, you need to know the tariff rate for each SKU. This is where a tool like TariffSnap becomes invaluable.

Step 3: Calculate the Profit Margin for Each SKU

Once you have the landed cost, you can calculate the profit margin for each SKU:

Profit Margin = (Revenue - Landed Cost - Other Costs) / Revenue

This will give you a clear picture of which products are profitable and which are not.

Using TariffSnap for SKU Profitability Analysis

Manually calculating the landed cost and profit margin for every SKU can be a time-consuming and error-prone process. TariffSnap automates this for you. By uploading a simple CSV of your products, you can get a complete SKU profitability analysis in minutes.

Your TariffSnap report will provide a clear, color-coded list of your products, showing you which to KEEP, which to KILL, and which to CHANGE PRICE. This allows you to take immediate action to stop losses and improve your overall profitability.

Frequently Asked Questions (FAQ)

What should I do with money-losing SKUs?

You have several options: you can try to renegotiate a lower price with your supplier, find a new supplier in a country with lower tariff rates, increase the retail price of the product, or, if none of those are viable, discontinue the product.

How often should I conduct a SKU profitability analysis?

It’s a good practice to conduct a SKU profitability analysis at least once a quarter, or whenever there are significant changes in your costs, such as new tariff rates or increased shipping fees.

Can I have a profitable business even with some money-losing SKUs?

While it’s possible, it’s not ideal. Money-losing SKUs are a drain on your resources and can mask the true performance of your business. The goal should be to have every product in your catalog contributing to your bottom line.

Conclusion: From Data to Decisions

Identifying money-losing SKUs is the first step. The real value comes from taking action based on that data. By regularly conducting a SKU profitability analysis and using a tool like TariffSnap to accurately calculate your landed costs, you can make smarter decisions about your product catalog, pricing, and sourcing. This will not only stop you from losing money but will also pave the way for a more profitable and sustainable e-commerce business.