Inventory glossary

What is Revenue per SKU?

Revenue per SKU is the total sales dollars a single product variant generates over a given period.

Revenue per SKU tells a store owner where the money actually comes from. A shop might have fifty SKUs but find that ten of them bring in most of the revenue, which matters when deciding what to reorder first or what to drop.

Use it alongside margin and sell-through rate. A SKU can post high revenue but low margin, so revenue alone does not tell you if it is worth the shelf space or the cash tied up in it.

Formula

Revenue per SKU = Units sold x Average selling price

Example

A candle store sells a lavender jar candle at $18 and moves 200 units in a month, giving $3,600 in revenue. A gift-set SKU sells for $45 and moves 60 units, giving $2,700. The lavender candle generates more revenue even though the gift set has a higher price per unit.

Common mistakes

  • Looking at revenue per SKU alone and ignoring margin, so a high-revenue low-margin SKU looks better than it is.
  • Mixing gross and net sales, which makes returns-heavy SKUs look stronger than they are.
  • Comparing SKUs with very different price points without also checking units sold.

Revenue per SKU and SteadyShelf

SteadyShelf uses sales history per variant to forecast demand and order-by dates, so revenue per SKU is a useful sanity check on which variants are worth keeping well stocked.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

Related terms

SKU · Gross margin · GMROI · Sell-through rate · Product velocity

Full inventory glossary

FAQ

Is revenue per SKU enough to decide which products to discontinue?

It can be useful but it is not the full picture. A SKU can have high revenue and still lose money if its margin is thin or its return rate is high. Pair it with margin or GMROI before deciding what to cut or expand.

Should I use gross or net sales for revenue per SKU?

Add up net sales for that SKU over the period you care about, usually a month or a year. Use net sales after returns, not gross sales, so the number reflects what actually stuck.

Let SteadyShelf do this math for every SKU

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