How the SKU Concentration Risk Calculator works
Buyers, lenders and your own sleep all depend on how spread out revenue is. The Herfindahl index (HHI) turns the share of every SKU into one concentration number.
Formula
- Share = SKU revenue ÷ Total revenue
- HHI = Σ (share²) × 10,000
- Effective SKUs = 10,000 ÷ HHI
Example
The spatula set is 63% of revenue: high concentration.
SKU revenue lines (one per line: name, revenue): Spatula set, 42000
Whisk, 12500
Tongs, 8000
Peeler, 4000
Frequently asked questions
What HHI is safe?
Below 1,500 is diversified, 1,500–2,500 moderate, above 2,500 concentrated.