Getting rid of products to improve profit

Getting rid of products to improve profit

Businesses looking to improve their profitability may need to consider cutting under-performing products and services. There are a few simple ways to decide which products should stay and which should go.

  • 80/20 rule

An often used marketing and business rule states that businesses should focus their attentions on the 20 per cent of products that generate 80 per cent of revenue. Using this principle, companies should compile a shortlist of the products and services that bring in the most profit and scrutinise the products that fall short of this mark.

  • Emotional attachment

There will always be those few products that have emotional significance, however for the sake of profitability; businesses should emotionally detach themselves from their products and services.

  • Trial run

If it is still too difficult to make the right cut, businesses should consider doing a trial run. Going a week or month no longer promoting and marketing the least profitable products will help businesses imagine a life without them. At the end of the chosen time, analyse the results.


If you believe the matters discussed above are relevant to your business, please contact Darren Smith of our office to discuss further.

Darren is a Chartered Accountant with extensive experience, including working in the big 4 and medium sized firms before becoming a partner of a city based firm in 2000.

He has gained much experience and has extensive knowledge in providing business and taxation advice, superannuation planning, negotiation of sales and acquisitions of businesses and property development. His client base covers a wide range of industry groups.

Darren works with business owners to grow their businesses and create personal wealth within and outside of their business.

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