Margin planning must start at SKU design
Teams lose margin when they calculate profitability after launch. Portfolio economics improve when cost and pricing assumptions are built into SKU strategy from day one.
1) Break cost into controllable drivers
- Raw material and conversion costs
- Packaging structure by channel
- Freight and handling assumptions
- Compliance and documentation overhead
2) Define pricing bands, not single prices
Use floor, target, and stretch bands so sales can respond to account-specific realities without eroding margin discipline.
3) Link MOQ policy to economics
- Set base MOQ that protects contribution margin.
- Create volume tiers with explicit give/get terms.
- Flag low-volume custom requests for approval.
4) Build scenario models before negotiations
- Best-case demand and stable costs
- Base-case forecast
- Stress-case with cost inflation and slower turns
5) Track margin realization monthly
Compare planned versus actual margins at SKU level and investigate deviations immediately. Small leakages across many SKUs create large portfolio erosion.
Conclusion
Margin strength is an operating discipline. Teams that institutionalize cost visibility, banded pricing, and scenario planning protect growth without sacrificing profitability.