The old 80/20 rule rears it ugly head in product line profitability where 80 percent of profits come from 20 percent of products. But before you decide to eliminate 80 percent of your products, consider this:

• Will some of the 80 percent eventually contribute to long-term growth?
• Does the 80 percent add positive contribution margin that can be applied to fixed costs above and beyond the fixed costs allocated to those products?
• Is the organization learning something from the 80 percent? Can this knowledge be applied elsewhere?
• Does the 80 percent add to lowering costs (because of volume, for example) for the other 20 percent?
• Are customers willing to pay more for a product that may be eliminated?
• Can a product line be sold, rather than eliminated, to realize some value?
• Will eliminating products diminish employee morale, creating costs that outweigh profitability gains?

These are just some of the questions that should be addressed before eliminating a product or product line. It’s a difficult proposition involving many intricacies.