Inventory how-to

How to find products that are losing you money

Products lose you money in two ways: they tie up cash in slow-moving stock, or they cost more to carry and discount than they earn.

Short answer: Products lose you money in two ways: they tie up cash in slow-moving stock, or they cost more to carry and discount than they earn. Find them by combining margin data with sell-through speed, not margin alone. The slowest sellers with the thinnest margins are your losses in waiting.

Look at margin and speed together

A product with a 40% margin that sells once a year is worse than a product with a 15% margin that sells every week. Pull a report of cost and sale price per variant, then pair it with units sold over the last few months. Anything with low margin and low sell-through is a candidate to cut or discount out.

Check days of stock, not just units on hand

A high unit count is not a problem by itself. The problem is how long that stock sits. Calculate days of stock as units on hand divided by average daily sales. A variant with 200 units on hand selling one unit a week has over three years of stock. That is cash sitting on a shelf, and every month it sits, it costs you in storage, insurance, and the risk of it never selling.

Watch for markdown creep

If you keep discounting the same SKUs every few months just to move them, that is a sign the product is structurally unprofitable at its original price, or you bought too much of it. Track how often each SKU appears in a sale or promo. Repeat offenders are usually the ones losing you money even when they do sell.

Separate dead stock from seasonal stock

Before you write off a slow seller, check if it is seasonal. A snow shovel with no sales in July is not dead stock. Compare against the same period last year if you have the history. If a product has never sold well in any season, it is a genuine loser, not a timing issue.

Step by step

  1. Pull cost and retail price for every active variant
  2. Pull units sold for the last 90 days per variant
  3. Calculate margin per unit (price minus cost) for each one
  4. Calculate days of stock (on hand / average daily sales) for each one
  5. Flag anything with low margin and more than 120 days of stock
  6. Check flagged items against last year's sales for seasonality
  7. Decide per flagged item: discount to clear, discontinue, or renegotiate cost with the supplier

Worked example

A store sells a phone case variant at $18 with a cost of $14, a margin of $4 or 22%. It has 150 units on hand and sells 2 units a week, or about 0.29 a day. Days of stock is 150 / 0.29, roughly 517 days, well over a year. Even though each sale is profitable, the carrying cost and tied-up cash on 517 days of stock make this variant a net drag, and it is a strong candidate to discount down and stop reordering.

How SteadyShelf helps

SteadyShelf does not calculate margin or profitability, it only forecasts sales and tells you when and how much to reorder. You will need to pull cost and price data from your store admin or accounting records yourself to spot money-losing products, then use SteadyShelf's days-of-stock view to confirm how long the slow movers have been sitting.

$29/month flat, unlimited products and suppliers, 30-day free trial. Run the numbers now with the free reorder point calculator.

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

Related guides

All inventory how-to guides ยท Inventory glossary

FAQ

Should I just cut every product with low margin?

No. A low-margin product that sells fast and often can still contribute more total profit than a high-margin product that barely sells. Always weigh margin against sell-through speed before deciding to cut anything.

How often should I run this check?

Quarterly is enough for most small stores. Checking monthly can lead to cutting seasonal items too early, since a few slow weeks do not always mean a product is a long-term loser.

Let SteadyShelf do this math for every SKU

Order-by dates per supplier, seasonal forecasts and draft POs for your Shopify store. $29/month after a 30-day free trial.

Get early access