The Situation
Gross margin was holding in the high 30s — below best-in-class benchmarks for the category and trending the wrong direction. Leadership’s instinct was that the problem was on the sales side. The data said the problem was inside the product portfolio: a handful of low-volume, high-touch, discount-heavy SKUs were quietly destroying margin while four core lines carried the business.
Nobody had ever pulled SKU-level contribution margin together with discounting behavior and demo-unit and RMA exposure. The product line meetings ran on intuition.
What CEI did
Built SKU-level contribution margin analysis incorporating raw material cost, direct labor, allocated overhead, discounting behavior, demo unit cost, and RMA replacement frequency.
Identified three product lines — Current Luxury, Origami, and a drapery line — as structural margin destroyers given the volume and complexity required to deliver them.
Recommended sunset or major realignment of the three lines and redirected sales and operational focus to the four lines actually driving contribution: KAOS, Nino, OEM, and the motorized portfolio.
Installed quoting floors tied to contribution margin and tightened demo unit and discount approval rules so future products couldn’t drift into the same trap.
3 SKUs
Targeted for Sunset
+4 Pts
Gross Margin Recovery Path
4 Lines
Sales/Ops Focus Redirected To
Leadership got the first true contribution view of the product portfolio they had ever held. The discounting and demo unit conversation moved from informal to enforced. The path to four points of recovered gross margin became visible and ownable.
In Their Words
We thought our sales team needed to work harder. CEI showed us our product mix was the issue, not effort. That changed how we run quarterly planning.”
— CEO | Confidential Client