{"id":36,"date":"2026-06-10T09:00:00","date_gmt":"2026-06-10T09:00:00","guid":{"rendered":"https:\/\/bizmargin.com\/blog\/stop-leaving-money-on-the-table-with-pricing\/"},"modified":"2026-07-25T03:35:27","modified_gmt":"2026-07-25T03:35:27","slug":"how-to-spot-underpriced-products-in-your-catalog","status":"publish","type":"post","link":"https:\/\/bizmargin.com\/blog\/pricing-strategy\/how-to-spot-underpriced-products-in-your-catalog\/","title":{"rendered":"How to Spot Underpriced Products in Your Catalog"},"content":{"rendered":"<p>In a catalog with dozens or hundreds of SKUs, underpriced products often hide in plain sight \u2014 selling steadily, looking healthy on a revenue report, while quietly returning far less margin than they should. The real cost to your business is substantial: every underpriced unit compounds across your entire sales volume, eroding profitability in ways that don&#8217;t always show up clearly in monthly P&amp;L statements.<\/p>\n<h2>Where to look first<\/h2>\n<ul>\n<li>Products where cost has crept up since the price was last set \u2014 a common and easy-to-miss cause. For example, if a supplier raised costs by 8% but your price stayed flat for 18 months, you&#8217;ve slowly destroyed your margin on that SKU.<\/li>\n<li>High-volume sellers, since a small per-unit underpricing multiplies fast at scale. A product selling 500 units per month with just a $2 margin shortfall is costing you $12,000 annually in lost profit.<\/li>\n<li>Products priced mainly by matching a competitor, without checking your own cost structure. Your competitor may have different supplier agreements, overhead, or fulfillment costs \u2014 their price isn&#8217;t your benchmark.<\/li>\n<\/ul>\n<h2>A quick audit method<\/h2>\n<p>Sort your catalog by margin percentage (lowest first), then cross-reference against sales volume. Create a simple matrix: plot products on two axes, with margin percentage on one side and monthly unit sales on the other. A low-margin, high-volume product is worth investigating immediately; a low-margin, low-volume product is lower priority.<\/p>\n<p>For example, if Product A has a 12% margin and sells 600 units monthly, versus Product B with an 8% margin selling 80 units monthly, Product A should be your first target \u2014 even though both are underperforming.<\/p>\n<h2>What to do once you find one<\/h2>\n<p>Don&#8217;t assume a price increase is the only fix \u2014 sometimes the real problem is cost, not price, and negotiating a better input cost solves the margin issue without touching what the customer pays. Before raising prices, audit your supplier agreements, manufacturing processes, and fulfillment methods. A 5% reduction in COGS has the same bottom-line impact as a 5% price increase, with zero customer friction.<\/p>\n<h2>The data says underpricing is the default risk, not overpricing<\/h2>\n<p>Pricing research consistently points the same direction: analysts at McKinsey have found that 80\u201390% of mispriced products are priced too low, not too high. One large-scale B2B pricing analysis found that roughly 89% of products were underpriced by at least 3.5%. The bias runs toward leaving money on the table, not scaring customers away.<\/p>\n<p>The leverage is bigger than it looks, too: a 1% price increase, with no drop in volume, translates to roughly an 11.1% increase in operating profit for a typical business, because that extra revenue mostly skips straight past your existing fixed costs. In concrete terms, if you have $500,000 in annual operating profit and raise prices by 1%, you&#8217;re looking at roughly $55,500 in additional profit \u2014 assuming no volume loss.<\/p>\n<h2>Practical signals a product is underpriced<\/h2>\n<ul>\n<li><strong>It sells out immediately at every restock.<\/strong> Consistent, fast sell-through is usually read as a win, but it&#8217;s one of the clearest underpricing signals in a catalog \u2014 demand is outrunning price. If you&#8217;re restocking weekly and still can&#8217;t keep inventory, the price is likely 10\u201315% too low.<\/li>\n<li><strong>Its margin sits meaningfully below your catalog average<\/strong> with no strategic reason (loss leader, clearance, market entry) for it to be there. If your average margin is 38% but a core product runs at 22%, that&#8217;s a red flag.<\/li>\n<li><strong>It hasn&#8217;t had a price review in 12+ months<\/strong> while input costs have moved. Rule of thumb: review pricing quarterly, minimum, for high-volume SKUs.<\/li>\n<li><strong>Competitors are priced noticeably higher<\/strong> for a comparable product with no clear quality gap explaining the difference. A 15\u201320% price gap warrants investigation; a 30%+ gap suggests your pricing is significantly out of line.<\/li>\n<\/ul>\n<h2>Common mistake<\/h2>\n<p>Treating a fast-selling, low-margin product as a success story rather than a pricing signal. Strong sell-through with weak margin is usually evidence the price should move up, not proof the price is right. The revenue looks healthy, but the profit tells a different story.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Master your profit margin strategy: Stop underpricing by 15-25%. Calculate true COGS, benchmark against industry standards, and boost net profit immediately.<\/p>\n","protected":false},"author":1,"featured_media":294,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_yoast_wpseo_title":"","_yoast_wpseo_metadesc":"","_yoast_wpseo_focuskw":""},"categories":[2],"tags":[23,8,25,12,17,24],"class_list":["post-36","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-pricing-strategy","tag-cost-of-goods-sold","tag-gross-margin-calculator","tag-margin-vs-markup","tag-pricing-strategy","tag-product-pricing","tag-profit-optimization"],"_links":{"self":[{"href":"https:\/\/bizmargin.com\/blog\/wp-json\/wp\/v2\/posts\/36","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bizmargin.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bizmargin.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bizmargin.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bizmargin.com\/blog\/wp-json\/wp\/v2\/comments?post=36"}],"version-history":[{"count":5,"href":"https:\/\/bizmargin.com\/blog\/wp-json\/wp\/v2\/posts\/36\/revisions"}],"predecessor-version":[{"id":959,"href":"https:\/\/bizmargin.com\/blog\/wp-json\/wp\/v2\/posts\/36\/revisions\/959"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bizmargin.com\/blog\/wp-json\/wp\/v2\/media\/294"}],"wp:attachment":[{"href":"https:\/\/bizmargin.com\/blog\/wp-json\/wp\/v2\/media?parent=36"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bizmargin.com\/blog\/wp-json\/wp\/v2\/categories?post=36"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bizmargin.com\/blog\/wp-json\/wp\/v2\/tags?post=36"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}