We’ve surveyed our accountants, and the results are clear: SKU names that are inconsistent and hard to read are the number one element that slows down efficient bookkeeping. We’ve discussed in the past how SKU names can drive outsourced accounting costs, and in this post, we’re breaking down a simple, readable formula you can follow to get your SKUs right the first time.
There are really only two main rules when developing SKU names for your products.
First, names should be unique within your product line. Obviously none of your SKUs should have the same name, but be sure not to make your SKU names too similar, either; this makes it difficult to tell your products apart when it’s time to reorder or analyze data from your sales channels.
Second, your SKUs should be pretty intuitively named and follow a logical structure (more on that below). This way you’ll be able to more easily identify products at a glance without a lot of time wasted deciphering your own secret SKU code.
Both of these guidelines will also make it easier to sort your spreadsheets by SKU name more easily, saving yourself and your bookkeeper time, money, and back-and-forth communication.
The SKU Equation
In order to keep your SKU names readable and intuitive, we suggest building each SKU with the following information:
You may have more than one brand in your portfolio. Starting with the brand tag at the beginning of the SKU makes it easier to visually separate your products by brand on a spreadsheet.
Then you’ll create a way to identify your product in the SKU. This can be an abbreviation, or if the product name is short enough, feel free to write the whole word.
Have more than one type of that product, like long- and short-sleeved, 1TB and 2TB storage capacity, or paperback and hardcover? Add that variant next in your SKU name.
Not every product will have a sub-variant, and some products will have more than one. This is where you account for things like color and size options of each of the previous variants.
Put them all together, and you’ll have your SKU! For example, if your brand Tom’s Toys sold a 32″ green hula hoop, you might name that SKU:
Keeping your SKU names consistent across all product lines will save you the headache of trying to decipher your spreadsheets – and your accounting team will thank you!
Looking to outsource your bookkeeping? Contact us for a free 15-minute discovery call.