In the journey of any business, leaders must make tough calls about which products to continue offering and which to discontinue in order to facilitate long-term profitability and growth.

When Steve Jobs returned to Apple as CEO in 1997, he found a company that was bloated and underperforming. He decided to Scrapie over 70% of the existing product line, which included over a dozen versions of the MacIntosh computer and focused on four main products: two desktop computers and two “portable” laptops.

Jobs had the company design sleek, attractive products that performed as well or better than their competition. He defended the decision to eliminate dozens of existing offers from saying“Deciding what not to do is as important as deciding what to do.” It's hard to imagine that Apple would ever have the largest company in the world without Jobs' bold decision to revamp Apple's bloated product line and start over.

Related: Advice from the greats: Deciding when to recall a product

Jobs' scorched earth approach worked for Apple, but your product evaluation shouldn't be so drastic. Here are the main considerations:

Does the product generate profits?

The profitability of a particular product is the simplest way to determine its continued viability. If you're continuing to invest in a product that people don't want to buy, sometimes you have to put your ego aside and call it quits. But it's not always as simple as concluding sales and profit.

Costco has famously kept the price of its hotdog/soda combo at $1.50 since 1985, and it has become part of the company's brand heritage. Adjusted for inflation, the combo should cost about $4.50, but the company knows the loss leader is a draw for its customers and a good way to boost brand loyalty. The combination is as much a part of Costco's identity as the giant shopping carts and bulk offerings.

But when evaluating any product—even a potential loss leader that helps you see the big picture—you need to know the product's profit margin and understand how it's performing over time.

There are many methods to track product profitability, including calculation operating margin, net profit margin OR gross profit marginwhich subtracts cost of goods sold (COGS) from gross profit. If gross revenue from a product is $100,000 in a given period and COGS is $30,000, the product's gross profit margin is $70,000 or 70%.

The method of calculation is not as important as consistently tracking data with the same metric over a period long enough to account for short-term variations such as winter holiday sales spikes and seasonal dips. I recommend tracking at least two years of data before making any decisions. This will give you a solid picture of how your product is performing in terms of profitability and overall sales trends.

There is no correct answer as to what level of profitability is acceptable, given that profit margins can vary significantly from one sector to another, and each business has its own profit goals. But if your product consistently loses money and doesn't create other benefits (eg the Costco hot dog combo that created repeat customers), it's time to move on.

Related: Is it time to give up on your business? How to adapt when your product stagnates

Does the product continue to fill a market need?

Technological advances can render once profitable products obsolete. It is important to regularly assess whether your product is currently meeting a market need and whether it will continue to do so in the near future.

In the automotive industry, there is a significant shift towards electric vehicles. EV sales pink in the third quarter of 2024 to almost 9% of total US vehicle sales, compared to 5.3% in the first quarter of 2022. Does this mean that car companies should abandon their non-EV products? Of course not.

The Ford F-15 gas engine continues to be the best selling vehicle in the countryselling over 750,000 units. The best-selling EV was the Tesla-Y, with 403,000 units. So while there's clear demand for electric vehicles, that doesn't mean Ford has to abandon its best-selling product anytime soon.

So you should regularly make an honest assessment of your product's viability in current and future markets.

Larger businesses can hire market research firms to conduct a thorough analysis of where your product stands against competitors and assess its future viability against anticipated market trends.

For smaller businesses, Google Trends is a free tool that allows them to do their own market research by assessing customer behavior – even on a regional basis – and overall industry trends and product demand. There are dozens of great ones tutorials online.

Regularly exploring market and sales trends will give you a feel for the market, where it's going and where your product fits. Just like if you're looking to sell your home, you need to familiarize yourself with the housing market in your area so you can adjust to its trends, prices, and level of demand so you can sell your home for a profit. optimal.

How do your customers feel about your product?

Before making any changes to your product lines, it's important to consider how your customers feel. Consider the example of Research In Motion (RIM), the Canadian company that offered mobile devices with physical keyboards through its BlackBerry line. RIM dominated the market from the late 2000s to 2011 with a loyal customer base that loved the company's physical keyboards.

When RIM began to lose ground after the launch of the Apple iPhone and Android platforms – with their increasingly popular touch screens – RIM tried to keep pace by creating a touch screen and physical keyboard version of the product. To compensate for the increased production costs, they outsourced production from Canada to Taiwan, and the quality of the equipment dropped significantly.

Ultimately, the diminished quality of the new products failed to attract new customers and alienated those previously loyal to Blackberry. The bottom line is that keeping up with consumer trends is important, but it may be more important to consider your customer's preferences before making drastic changes.

Post-purchase online surveys allow customers to provide direct and immediate product feedback, with Survey monkey AND Type form offering affordable solutions. Research on social media is less representative of the wider market as people usually only post about products they love or hate, but they value how customers feel at a given moment. Complex with shoes AND Brand watch are both excellent tools to aid your analysis. Focus groups with customers is another tool to dig deeper into how customers view your product, whether they will repurchase it, or how it can be refined for broader appeal.

The performance of Net Promoter Score Polling (NPS) is another useful way to gauge how customers perceive your product and whether they are promoters or critics when discussing your offering with others. A high NPS indicates a strong perception of the product, while a low score means there's a problem you'll need to dig into.

Ultimately, evaluating a product's contributions to your company's bottom line and whether it will deliver significant strategic value in the future can be more art than science. However, the tools above should provide a solid foundation for understanding what works and what doesn't in order to sustain and grow a successful business.