The short answer: to know which products are losing you money, you have to calculate the profit of each SKU after every cost it generates: the product, the payment fee, the installments, shipping, discounts and the advertising you used to sell it. Your best-selling products are almost never the most profitable ones, and the ones losing money tend to be three or four that look great on the sales report.
You have 80 products in your store. You sell well. Order count grows month after month. But when you check the bank, the money isn't there. What's going on? The answer is almost always SKU profitability: most e-commerce stores in Argentina have 3 or 4 products that look good in the sales spreadsheet but are actually destroying the business's margin. And nobody sees it because nobody measures it.
Why isn't "selling a lot" the same as "making money"?
The most common mistake in e-commerce is confusing volume with profitability. A product can be your bestseller by units sold and, at the same time, the one doing the most damage to your margin. It happens all the time.
Imagine you sell 500 units of Product A at $10,000 each. That's $5,000,000 in sales. Looks excellent. But if that product has a production cost of $7,500, and you add shipping ($800), the Mercado Pago fee ($600) and advertising ($900 on average per sale), the real margin is $200 per unit. $100,000 of profit on $5,000,000 of revenue. A 2% margin.
Meanwhile, Product B, which sells 50 units a month at $15,000, leaves $4,500 of margin per sale. $225,000 of profit on $750,000 of revenue. A 30% margin.
If you put your whole ad budget behind Product A because "it sells more," you're funding a bestseller that doesn't make you money. Product B is the one you should be scaling.
The Pareto principle applied to your catalog
In most e-commerce stores, 20% of SKUs generate 80% of real profit. The other 80% of the catalog eats up stock, operating time, warehouse space and ad budget to generate the remaining 20% of profit. If you don't know which products are your "top 20%," you're flying blind.
How do you calculate real profitability by SKU?
To calculate profitability by product, you have to subtract every cost from the selling price. Not just the cost of goods. The full calculation is:
Real margin per SKU =
Selling price
− Product cost (purchase or manufacturing price)
− Shipping or logistics cost
− Platform fee (Tiendanube, Shopify, Mercado Libre)
− Payment processing fee (Mercado Pago, interest-free installments)
− Ad cost attributed to that unit (ad spend / units sold through ads)
− Proportional share of fixed costs (rent, salaries, software)
= Real profit per unit
The step almost nobody gets right is the hidden costs: Mercado Pago fees on interest-free installments, the Mercado Envíos Full charge, Mercado Libre fees that vary by category. You can see the full breakdown of these costs in the article on hidden e-commerce costs and in the analysis of Mercado Pago fees.
Which products are a problem even though they sell well?
There are three types of SKUs that look good but are destroying you:
- The low-margin bestseller: it sells a lot, but the margin is so tight that any extra cost (free shipping, a one-off discount, a supplier price increase) pushes it negative.
- The advertised product without enough profitability: many stores put ad spend behind their best-selling products without checking whether the margin can absorb the ad cost. If that product's CPA exceeds its margin, every sale generates a loss.
- The high-return product: if a SKU has a 15% return rate and your margin is 20%, the cost of returns is eating your profit.
This connects directly to calculating contribution margin by product: the metric that tells you whether that SKU adds to the business or drains it.
Real case: the "star" product that was funding losses
An apparel e-commerce store in Argentina had its basic t-shirt as its number one product in sales. 800 units a month. Constant ad spend behind it. When they calculated real SKU profitability with Escalafy, they found that t-shirt left $180 of margin per unit after all costs. The percentage margin was 4%. The Mercado Libre Full campaigns for that product were spending double what they generated. They stopped advertising it, raised the price by 12%, and the margin jumped to 15%.
What should you do with products that don't deliver margin?
Once you know which SKUs aren't profitable, you have four options:
- Raise the price: if the market can take it, it's the simplest fix.
- Renegotiate with the supplier: sometimes a thin margin is a cost problem, not a price problem.
- Cut the ad cost: stop advertising that product or significantly reduce ad spend on it.
- Discontinue the SKU: if there's no way to make it profitable, freeing up the capital tied up in stock may be the best decision.
Before making any of these decisions, also check whether that product plays an "entry" role in the catalog: sometimes a low-margin product brings in customers who later buy other, more profitable products. In that case, the analysis is by customer LTV, not just SKU margin.
To see the real cost of each channel where you sell that product, Escalafy has a Mercado Libre fees section that automatically calculates how much Mercado Libre charges you based on category and selling price.
How does Escalafy calculate SKU profitability in real time?
Calculating profitability by product manually in Excel means cross-referencing data from multiple sources: Tiendanube or Shopify for sales, Meta Ads for ad cost by product, Mercado Pago for fees, and your costing system for cost of goods. And every time something changes (the exchange rate, the supplier's cost, the platform fees), you have to update everything.
Escalafy connects all those sources automatically and calculates real profitability by product by adding up every cost: cost of goods, shipping, each channel's fees, attributed ad cost and prorated fixed costs. No Excel. No errors. In real time.
The result is a table where every SKU has its real margin. At a glance you know which ones to scale, which to keep and which to discontinue.
According to the product profitability analysis published by Accountali, e-commerce businesses that run this analysis regularly identify, on average, between 3 and 5 SKUs that account for 70% of the business's real profit. Focusing effort on those products tends to improve overall margin by 40-60%.
Frequently asked questions about SKU profitability
What's a healthy margin per product for e-commerce in Argentina?
A net margin per SKU (after all costs, including advertising) of between 15% and 35% is healthy for most categories. Below 10%, any change in costs pushes you negative. Above 40%, you have room to scale aggressively.
Should I calculate profitability by SKU or by category?
First by category to find where the problem is, then by SKU to be surgical. If a whole category has low margin, the problem may be structural (supplier cost, price competition). If one specific SKU inside a profitable category doesn't deliver margin, the problem is isolated.
How do I include ad cost in SKU profitability?
The simplest way is to divide total ad spend on that product by the units sold that came from advertising. If you spent $100,000 on Meta to sell 50 units of Product A, the ad cost per unit is $2,000. That number gets subtracted straight from the margin.
How often should you review SKU profitability?
At least once a month. If you deal with exchange rate swings, supplier changes or recurring promotions, it's worth reviewing weekly. With a tool like Escalafy that updates it in real time, you can check it whenever you want with no extra work.
SKU profitability is the metric that separates the e-commerce businesses that scale from the ones that sell more and more and make less and less. If you don't know which products make you money and which are sinking you in Argentina, you're making ad, pricing and stock decisions blind. Measure, cut what doesn't work and scale what does.
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