What is a SKU? How to create SKUs for your products

What is a SKU? A SKU (stock keeping unit, usually said “skew”) is a short code you give each product you sell so you can track it. Every distinct item gets its own SKU: a blue 12 oz mug is one SKU, a green 12 oz mug is another. You make SKUs up yourself, and they only need to make sense inside your own business.

This guide explains what a SKU is for, how it differs from a UPC and a barcode, how to build a simple SKU system, and the mistakes that cause trouble later.

What a SKU is for

A product name like “Mug” isn’t precise enough to run a shop on. You might have mugs in three colors and two sizes, and each one sells at a different rate. A SKU gives every version a unique label so you can:

• Count stock accurately. You know you have 4 blue 12 oz mugs left, not just “some mugs.”
• Ring up the right item fast. Type or scan the SKU instead of scrolling a list.
• Reorder the right thing. Your supplier or your own production list gets the exact version that sold out.
• See what sells. Reports by SKU show that blue outsells green two to one, which a report on “mugs” would hide.

SKUs are the building block of inventory tracking. Without them, stock counts, reorder points and sales reports get fuzzy fast.

SKU vs UPC vs barcode

These three get mixed up all the time. They’re related, but they aren’t the same thing.

The simplest way to think about it: the SKU and the UPC are numbers or codes, and the barcode is a way to print a code so a scanner can read it.

If you only sell in your own shop, at markets or at pop-ups, your SKU is usually all you need. You can print it as a barcode (Code 128 handles letters, numbers and dashes) and scan it at checkout. If a retailer or marketplace will sell your product, they may require an official UPC as well. In that case the product has both: your SKU for your own records and a UPC for theirs. Barcodes for products walks through when you need a UPC and how to get one. To turn SKUs into labels, try the free barcode generator.

How to create a SKU system

A good SKU system is boring and consistent. Anyone on your team should be able to look at a SKU and roughly know what the product is. Here’s a simple way to set one up.

1. Pick the parts of the code

Most small-shop SKUs have two to four parts, from general to specific. Common parts are:

• Category or product type: MUG, TEE, CNDL (candle), SOAP.
• Style or design: a short word or number for the design, like FERN or 03.
• Variant details: color, size, scent or weight, like BLU, L, 8OZ.

2. Choose a fixed order and separator

Decide the order once and stick to it, for example TYPE-STYLE-COLOR-SIZE. Use dashes between parts so the code is easy to read out loud and easy to scan.

3. Keep abbreviations short and documented

Write your abbreviations down in a simple list (BLU = blue, GRN = green, S/M/L/XL for sizes) so they stay consistent when you add new products next year.

4. Assign a SKU to every variant you sell separately

If a customer can pick it and you want to count it, it needs its own SKU. A T-shirt in 3 colors and 4 sizes is 12 SKUs.

SKU examples

Here’s what a SKU system looks like for a few kinds of small sellers.

SKUs for variants

Variants are where a clear system pays off. Start with a base SKU for the product, then add a suffix for each variant. For the fern T-shirt, the base is TEE-FERN and the variants are TEE-FERN-GRN-S, TEE-FERN-GRN-M, TEE-FERN-BLK-S and so on. Sorting by SKU then groups every version of a product together, which makes stock counts and reorders much easier.

Common SKU mistakes

• Reusing a SKU. Never give a retired product’s SKU to a new one. Old sales history will get mixed into the new product’s reports.
• Starting with zeros. Spreadsheets often strip leading zeros, so 0012 becomes 12 when you import a CSV. Start SKUs with a letter instead.
• Using letters that look like numbers. O and 0, I and 1, S and 5 are easy to confuse when someone types a SKU by hand. Avoid mixing them in the same position.
• Spaces and special characters. Spaces, slashes, ampersands and accented letters cause problems in spreadsheets, labels and some barcode formats. Stick to capital letters, numbers and dashes.
• Making SKUs too long. A 25-character SKU makes a long barcode that’s harder to print on small labels and slower to type. Aim for roughly 6 to 15 characters.
• Putting the price in the SKU. Prices change; SKUs shouldn’t. Keep price in its own field.
• Mixing upper and lower case. To a scanner or a system that matches codes exactly, mug-blu-12 and MUG-BLU-12 may be different codes. Pick one case (usually capitals) and use it everywhere.
• Using the supplier’s code as your SKU. If you change suppliers, your whole catalog changes. Keep the supplier code in a separate note if you need it.
• No SKU at all for “small” items. Stickers, postcards and add-ons add up. If you sell it, give it a SKU so it shows up in your reports.

Do you need SKUs if you’re a small seller?

If you sell five things from a coffee cart, you can get by with names. As soon as you have variants, more than a few dozen products, or anyone else ringing up sales, SKUs save time. They make stock counts faster, let you scan instead of search, and make reports you can trust. They also feed straight into useful numbers like inventory turnover and profit per product.

The easiest time to set up SKUs is before your catalog grows. Spend an hour building the list in a spreadsheet, then import it into your POS system.

SKUs in SleepingFire

In SleepingFire, every product has a SKU along with its price and cost, and size or color variants each get their own SKU suffix and stock count. You can import products from a CSV, print Code 128 barcode labels from your product SKUs on sheet labels or 58/80 mm thermal printers, and scan them at checkout with your phone or tablet camera, which matches the SKU exactly. See how barcode scanning works.