Articolo 5:
THERE IS NO SUCCESSFUL INNOVATION WITHOUT ECONOMIC LOGIC
Why Private Equity Must Measure Total Product Economic Contribution—not Direct Margin Alone
Article 5 of 100 — The Product Side of Investment Performance
By Enrique Luis Sardi, Founder of SARDI and Co-Founder of SARDI PRO CAPITAL
Executive Summary
Innovation is not economically valuable because it is new.
Innovation becomes valuable when it improves a company’s ability to generate profitable revenue, defend its market position, serve customers, use resources intelligently and create sustainable enterprise value.
For product-centred companies, the product is not merely something the company sells.
The product is the point where:
- Customer demand becomes revenue
- Technology becomes market value
- Materials become gross margin
- Strategy becomes physical reality
- Brand becomes customer preference
- Development investment becomes future cash flow
- Sustainability commitments become measurable product decisions
- Enterprise value becomes visible to a future buyer
This leads to a fundamental principle:
There is no successful innovation without economic logic.
However, economic logic cannot be reduced to the direct margin of one product.
Some products generate profit directly.
Others create customer access, enable larger sales, increase the value of adjacent products, accelerate migration to a new platform, reinforce the brand or protect the installed base.
Evaluating these products only through direct gross margin can lead management and investors to eliminate strategically valuable products—or continue funding products whose apparent revenue hides economic destruction.
SARDI PRO CAPITAL therefore introduces the concept of:
Total Product Economic Contribution — TPEC
TPEC is a managerial framework for measuring the complete economic role of a product across the company and its portfolio.
TPEC is intended to become the EBITDA view of the product: not a replacement for statutory accounting, but an integrated perspective connecting direct margin, indirect contribution, portfolio effects, strategic value, lifecycle costs and investment performance.
Every significant product initiative must be evaluated through two connected lenses: COGS logic and Total Product Economic Contribution logic.
The Product Is the Economic Centre of a Product-Centred Company
In a product-centred business, the product is not the final output of the organisation.
It is the company’s principal economic infrastructure.
The product determines or materially influences:
- What customers buy
- Why customers choose the company
- How much they are willing to pay
- How frequently they return
- Which complementary products they purchase
- What the company must manufacture
- Which suppliers and technologies it depends on
- How much working capital it requires
- How much service and warranty support it consumes
- How quickly the company can enter new markets
- How defensible its competitive position becomes
- How credible its future growth story appears at exit
A product is therefore simultaneously:
- A revenue generator
- A margin architecture
- A customer-acquisition mechanism
- A technology container
- A manufacturing system
- A brand expression
- A platform for future growth
- A source of operational risk
- A source of strategic optionality
Private equity investors may see the company through financial statements, forecasts and value-creation bridges.
SARDI PRO CAPITAL examines the physical product system producing those financial results.
The numbers describe the economic outcome. The product explains how that outcome is created.
Innovation Without Economic Logic Is Experimentation
Experimentation has value.
Research has value.
Exploration has value.
Not every early investigation needs an immediate financial return.
However, when a company commits substantial development capital, management attention, engineering resources, manufacturing capacity and commercial effort to a significant product initiative, the initiative must have an explicit economic purpose.
That purpose can be:
- Increasing revenue
- Increasing gross margin
- Creating pricing power
- Entering a strategic account
- Opening a new market
- Reducing product complexity
- Protecting an installed base
- Increasing customer retention
- Enabling service or consumable revenue
- Reducing operational risk
- Accelerating future product development
- Meeting regulatory requirements
- Improving resource efficiency
- Strengthening exit attractiveness
The purpose does not always have to be immediate direct profit.
It must, however, be economically intelligible.
A product initiative without a relevant strategic or financial objective is not yet a value-creation initiative.
It is an unqualified investment hypothesis.
Direct Margin Is Important—but Insufficient
Direct product economics normally begin with:
- Net revenue
- Discounts and rebates
- Direct materials
- Direct labour
- Manufacturing cost
- Logistics
- Product-specific warranty or service costs
- Contribution margin
These metrics remain essential.
A company cannot sustainably ignore what it costs to produce and support its products.
But direct margin captures only one part of the product’s economic role.
Consider a product with a modest direct margin that:
- Opens access to a strategic customer
- Leads to recurring consumable sales
- Enables the sale of a larger system
- Converts customers to a more profitable platform
- Establishes credibility in a new market
- Raises the perceived value of the complete portfolio
That product may create substantial enterprise value despite producing limited standalone profit.
Now consider a high-margin product that:
- Requires excessive customisation
- Consumes scarce engineering capacity
- Creates unique components and inventory
- Cannibalises a stronger platform
- Generates high warranty exposure
- Prevents portfolio standardisation
- Distracts the sales organisation
- Has limited scalability
That product may report an attractive gross margin while destroying value elsewhere.
Direct margin matters.
Total economic contribution matters more.
Different Products Perform Different Economic Jobs
A product portfolio should not be treated as a collection of economically independent items.
Each product can perform a specific role inside a broader value system.
1. Core Profit Product
A Core Profit Product generates material revenue and direct contribution margin.
Its principal metrics include:
- Net revenue
- Gross margin
- Contribution margin
- Volume
- Price realisation
- Customer retention
- Working-capital requirements
This is the most visible economic role, but not the only one.
2. Gateway Product
A Gateway Product provides the customer’s first practical entry into the company’s portfolio.
It may have:
- A lower purchase barrier
- Lower implementation risk
- Simpler configuration
- Faster validation
- Lower initial commitment
Its economic value may emerge through what happens after the initial sale.
Relevant metrics include:
- New-account acquisition
- Conversion into larger products
- Customer acquisition cost
- Downstream revenue
- Downstream margin
- Time to second purchase
- Customer lifetime value
- Product attach rate
A Gateway Product should not be evaluated only through its first invoice.
Its economics depend on the customer relationship it creates.
3. Bridge Product
A Bridge Product moves customers, capabilities or markets from one economic position to another.
Examples include:
- Moving customers from a legacy platform to a new architecture
- Connecting an existing product family to a new technology
- Introducing a company to an adjacent market
- Creating compatibility between old and new systems
- Reducing the risk of platform migration
Relevant metrics include:
- Migration rate
- Revenue protected during transition
- Churn avoided
- Upgrade revenue
- Legacy support costs reduced
- Adoption of the target platform
- Time required to complete migration
A Bridge Product may be temporary by design.
Its success should be measured by the transition it enables, not by whether it becomes a permanent revenue leader.
4. Enabling Product
An Enabling Product makes the sale or use of another product possible.
It can be:
- A control system
- An interface
- A component
- A certification package
- An accessory
- An infrastructure product
- An integration module
- A software or hardware connector
The Enabling Product may generate limited independent revenue while enabling a much larger economic system.
Relevant metrics include:
- Enabled system revenue
- Attach rate
- Contribution from enabled products
- Customer adoption
- Installation or integration time
- Sales opportunities made possible
- Margin generated by the complete solution
Removing an Enabling Product because of weak standalone margin can damage the economics of the entire portfolio.
5. Pull-Through Product
A Pull-Through Product generates subsequent purchases.
Examples can include:
- Consumables
- Replacement parts
- Service contracts
- Software subscriptions
- Upgrades
- Accessories
- Maintenance
- Complementary equipment
The first product creates an installed base.
The installed base creates repeat demand.
Relevant metrics include:
- Pull-through revenue
- Pull-through margin
- Attach rate
- Purchase frequency
- Installed-base penetration
- Recurring revenue
- Service lifetime
- Customer lifetime value
The first product’s real contribution can therefore be considerably larger than its direct margin.
6. Cross-Sell Product
A Cross-Sell Product increases the number or value of products purchased by an existing customer.
Relevant metrics include:
- Cross-sell conversion
- Incremental basket value
- Incremental contribution margin
- Product-family penetration
- Revenue per customer
- Margin per customer
- Sales-cycle reduction
Cross-sell contribution should be measured incrementally.
Revenue that would have occurred without the product should not be attributed to it.
7. Brand Elevator
A Brand Elevator is a product that increases the perceived capability, relevance or desirability of the company.
It may:
- Demonstrate technological leadership
- Improve the credibility of the sales organisation
- Attract new customer segments
- Create visibility
- Raise the price ceiling of adjacent products
- Increase employee and partner attraction
- Reposition the company in the market
Its wider benefit is often described as a halo effect.
Relevant evidence can include:
- Price realisation across the portfolio
- Premium-product mix
- Qualified inbound demand
- Inclusion in strategic tenders
- Win rates
- Brand consideration
- Distributor or partner interest
- Changes in customer perception
- Increased sales of adjacent products
Halo effects are real only when supported by evidence.
They should never become a convenient excuse for products that fail economically.
8. Platform Product
A Platform Product creates reusable architecture, components, technology or capabilities from which multiple products can be developed.
Its contribution can include:
- Lower future development costs
- Faster time-to-market
- Higher component commonality
- Lower inventory
- Easier maintenance
- Reduced engineering complexity
- Scalable product variants
- Stronger quality and reliability
Relevant metrics include:
- Reuse rate
- Common-component ratio
- Development time saved
- Engineering cost avoided
- Number of derived products
- Portfolio margin improvement
- Reduction in unique parts
- Platform-generated revenue
A Platform Product may require significant upfront investment.
Its economics must be assessed across the complete family and expected lifecycle.
9. Retention or Defensive Product
A Retention Product protects customer relationships, installed-base revenue or market position.
Its role may be to:
- Prevent churn
- Maintain compatibility
- Respond to a competitor
- Meet a critical customer requirement
- Protect service revenue
- Preserve access to an account
Relevant metrics include:
- Revenue at risk
- Churn avoided
- Contracts retained
- Service revenue protected
- Customer lifetime extended
- Competitive displacement prevented
The correct comparison is not always product revenue versus product cost.
It may be product cost versus the value that would otherwise be lost.
10. Market-Access Product
A Market-Access Product enables entry into a geography, regulated sector, customer category or procurement framework.
Its contribution may include:
- Regulatory compliance
- Qualification
- Certification
- Compatibility
- Local market relevance
- Sustainability credentials
- Public procurement eligibility
Relevant metrics include:
- Addressable market enabled
- Qualified opportunities
- Revenue from newly accessible markets
- Time to regulatory approval
- Compliance costs
- Margin from enabled sales
Total Product Economic Contribution — TPEC
Total Product Economic Contribution is a SARDI PRO CAPITAL managerial framework for assessing the complete economic effect of a product across the business and product portfolio.
TPEC is not currently an IFRS or GAAP accounting measure.
It should not be presented as audited financial performance without appropriate reconciliation.
TPEC is designed as an investment and operating decision framework.
It answers a broader question than gross margin:
What total economic contribution does this product create, enable, protect or destroy?
A Conceptual TPEC Formula
TPEC can be expressed conceptually as:
Direct Product Contribution
+ Pull-Through Margin
+ Cross-Sell Contribution
+ Recurring and Installed-Base Contribution
+ Gateway Customer Value
+ Enabling-Product Contribution
+ Platform and Reuse Economics
+ Evidenced Pricing and Portfolio Halo Effects
+ Risk-Adjusted Strategic Contribution
− Attributable Lifecycle Operating Costs
The calculation must avoid double counting.
Each component requires:
- A defined baseline
- A credible counterfactual
- A measurement period
- An attribution rule
- A confidence level
- An accountable owner
- A connection to actual financial performance
TPEC Is the EBITDA View of the Product
EBITDA gives investors a view of operating performance before financing, tax and selected non-cash charges.
TPEC is intended to provide an analogous managerial view at product level.
It consolidates the product’s wider operating contribution rather than examining only:
- Unit margin
- Revenue
- Engineering cost
- Launch success
The analogy has limits.
A product is not an independent legal entity.
Many costs and benefits are shared across products.
Brand, customer access and platform economics can be difficult to attribute precisely.
For this reason, TPEC should be presented through transparent value bridges rather than through one unexplained number.
A credible TPEC report should show:
- Direct economic contribution
- Indirect portfolio contribution
- Strategic contribution
- Attributable operating costs
- Evidence quality
- Attribution confidence
- Expected duration
- Economic value realised
COGS Logic and TPEC Logic
Every significant product initiative must pass through two complementary disciplines.
COGS Logic
COGS logic asks:
- Can the product be manufactured economically?
- Which materials and components determine cost?
- Which costs scale with volume?
- What creates manufacturing complexity?
- What causes scrap, rework or warranty?
- Which functions cost more than customers value?
- How does architecture influence production?
- Which assumptions are sensitive to volume?
- Can the cost target survive real industrialisation?
COGS definitions must remain consistent with the company’s accounting policies.
For management decisions, product economics may also need to include costs beyond formal COGS, such as:
- Product-specific service
- Warranty
- Installation
- Training
- Regulatory maintenance
- Returns
- Inventory complexity
- End-of-life obligations
TPEC Logic
TPEC logic asks:
- What direct profit does the product generate?
- Which additional sales does it enable?
- Which customer relationships does it create?
- Which revenues does it protect?
- Which future products does it accelerate?
- Which pricing or brand effects does it support?
- Which strategic markets does it open?
- Which risks does it reduce?
- Which lifecycle costs does it create?
COGS logic protects economic feasibility.
TPEC logic captures strategic completeness.
A product with strong TPEC but undisciplined COGS may fail operationally.
A product with excellent COGS but weak TPEC may be efficient at creating something the market does not need.
The TPEC Investment Decision
Every meaningful innovation programme should answer seven questions before major capital is committed.
1. What Economic Job Must the Product Perform?
Is it expected to:
- Generate direct margin?
- Open a market?
- Enable other sales?
- Protect revenue?
- Create a platform?
- Elevate the brand?
- Reduce risk?
2. What Is the Baseline?
What happens without the initiative?
Without a credible counterfactual, strategic value can easily be overstated.
3. What Is the Complete Cost?
The decision should consider:
- Development
- Tooling
- Manufacturing
- Launch
- Commercial enablement
- Service
- Working capital
- Compliance
- End-of-life obligations
4. What Is the TPEC Hypothesis?
Which direct and indirect contributions are expected?
5. What Evidence Supports It?
Evidence can include:
- Customer behaviour
- Stakeholder interviews
- Willingness to pay
- Order history
- Product attach rates
- Platform reuse
- Market-access requirements
- Cohort performance
- Cost modelling
- Technical validation
6. What Must Be True?
The assumptions underlying success should be made explicit.
7. When Should the Initiative Stop?
A disciplined innovation process defines termination criteria before organisational commitment makes cancellation politically difficult.
Product Ethics Is Part of Economic Logic
Economic logic that ignores material ethical consequences is incomplete.
A product can appear profitable while transferring costs to:
- Workers
- Suppliers
- Customers
- Communities
- Future owners
- The environment
- The company’s reputation
- Future regulatory compliance
OECD guidance places responsible-business due diligence across a company’s operations, supply chains and business relationships, noting that many significant environmental and social impacts occur in the value chain rather than inside the company’s own facilities.
The International Labour Organization similarly connects responsible supply chains with labour rights, occupational safety, social dialogue, skills, productivity and competitiveness.
For a Product Operating Partner, production ethics therefore includes:
- Worker health and safety
- Respect for fundamental labour rights
- Responsible sourcing
- Supplier traceability
- Avoidance of forced and child labour
- Fair and realistic supplier conditions
- Product safety
- Responsible use of data and technology
- Transparency about product performance
- Avoidance of planned or unnecessary obsolescence
- Responsible end-of-life design
These factors are not separate from investment performance.
They can affect:
- Supply continuity
- Product quality
- Regulatory exposure
- Customer qualification
- Public procurement
- Employer reputation
- Brand trust
- Litigation risk
- Exit readiness
Product Longevity Is an Economic Discipline
Longevity does not mean preserving every product indefinitely.
A long-lived product should remain:
- Useful
- Safe
- Serviceable
- Repairable
- Upgradeable
- Adaptable
- Economically supportable
In industrial markets, product longevity can create:
- Customer trust
- Lower total cost of ownership
- Long-term service revenue
- Installed-base stability
- Higher residual value
- Reduced replacement disruption
- Stronger customer retention
- More predictable lifecycle economics
The European Union’s Ecodesign for Sustainable Products Regulation establishes a framework addressing product durability, reliability, repairability, upgradability, reusability, recyclability, resource efficiency and environmental footprint. It also introduces the Digital Product Passport framework.
These characteristics are becoming part of product strategy, market access and future competitiveness—not merely environmental communication.
A product designed for longevity can also be designed for:
- Modular upgrades
- Component replacement
- Remanufacturing
- Software evolution
- Refurbishment
- Material recovery
- Secondary-market value
These characteristics can produce measurable TPEC through lower lifecycle costs, stronger retention, recurring services and reduced obsolescence risk.
ESG Must Enter the Product—not Only the Report
ESG becomes economically relevant when it changes decisions.
For product-centred companies, ESG should influence:
- Materials
- Energy consumption
- Manufacturing processes
- Product safety
- Supplier selection
- Product longevity
- Repairability
- Packaging
- Transport
- Product use
- Maintenance
- End-of-life treatment
- Workforce conditions
- Governance and traceability
The Principles for Responsible Investment describes responsible investment in private equity as the integration of ESG factors into investment decisions and active ownership across due diligence, the holding period and exit.
The IFRS Sustainability Disclosure Standards similarly focus on sustainability-related risks and opportunities that could affect an entity’s prospects and influence capital-provider decisions.
This means ESG should not be treated as:
- A separate communications exercise
- A generic score
- A list of positive intentions
- An unverified sustainability claim
- A retrospective annual-report section
ESG should be incorporated into the product’s economic architecture.
Examples of ESG-Linked TPEC
A more energy-efficient product may create:
- Lower customer operating cost
- Higher willingness to pay
- Greater tender competitiveness
- Reduced regulatory exposure
A repairable product may create:
- Longer customer relationships
- Service revenue
- Lower warranty replacement costs
- Higher residual value
- Lower material consumption
A traceable supply chain may create:
- Market access
- Lower disruption risk
- Stronger customer qualification
- Reduced reputational exposure
These effects can enter TPEC when they are measurable.
Environmental and social impacts that cannot credibly be monetised should still be measured and reported separately.
TPEC must not become a method for inventing financial values for every positive impact.
TPEC and the Sustainable Development Goals
The United Nations Sustainable Development Goals are public-policy objectives, not a product profitability formula.
They can nevertheless provide a useful framework for understanding how product decisions connect with broader economic, social and environmental outcomes.
For product-centred industrial companies, particularly relevant goals can include:
SDG 8 — Decent Work and Economic Growth
Relevant product and production decisions include:
- Safe manufacturing
- Skills development
- Productive employment
- Responsible supplier relationships
- Resource-efficient economic growth
SDG 9 — Industry, Innovation and Infrastructure
Relevant decisions include:
- Resilient industrial infrastructure
- Sustainable industrialisation
- Technology development
- Industrial innovation
- Upgrading production capabilities
SDG 12 — Responsible Consumption and Production
Relevant decisions include:
- Resource efficiency
- Waste reduction
- Product durability
- Repairability
- Circularity
- Responsible material use
- Lifecycle management
SDG 13 — Climate Action
Relevant decisions include:
- Energy efficiency
- Emissions reduction
- Lower-carbon materials
- Supply-chain resilience
- Climate-adapted product systems
The UN explicitly connects the SDGs with sustainable industrialisation, innovation, decent economic growth and responsible consumption and production.
SARDI PRO CAPITAL recommends connecting product initiatives to specific SDG targets only when a credible relationship exists.
Placing several SDG icons next to a product does not demonstrate impact.
Evidence does.
Sustainable Products Need Sustainable Economics
A sustainable product that cannot survive economically will struggle to generate lasting impact.
An economically attractive product that creates unacceptable environmental, labour or governance liabilities is not genuinely sustainable either.
The objective is not to choose between profitability and responsibility.
The objective is to design product systems where:
- Customer value
- Company economics
- Resource efficiency
- Human responsibility
- Regulatory readiness
- Long-term competitiveness
reinforce one another.
This is the deeper meaning of economic logic.
It does not mean maximising short-term product margin at any cost.
It means creating a product capable of generating durable value without depending on hidden, transferred or deferred costs.
How SARDI PRO CAPITAL Applies TPEC
SARDI PRO CAPITAL applies the scientific mindset of FORMULA SARDI to product economics.
SARDI publicly describes FORMULA SARDI as a multidisciplinary approach developed across industrial machinery, automation, manufacturing equipment and market-driven products.
For private equity engagements, the process can include:
1. Product Role Definition
SARDI PRO CAPITAL identifies the economic job of each material product.
2. Direct-Economics Analysis
SARDI PRO CAPITAL examines revenue, pricing, COGS, margin and lifecycle cost.
3. Portfolio-Relationship Mapping
SARDI PRO CAPITAL maps gateway, enabling, pull-through, cross-sell, platform and halo relationships.
4. TPEC Hypothesis
SARDI PRO CAPITAL defines the expected total contribution and supporting assumptions.
5. Evidence Collection
SARDI PRO CAPITAL gathers market, customer, stakeholder, technical and financial evidence.
6. Product Value Engineering
SARDI PRO CAPITAL develops interventions that improve customer value, COGS, portfolio contribution or strategic relevance.
7. Validation
SARDI PRO CAPITAL tests whether the expected economic logic survives market, technical and operational scrutiny.
8. Execution
SARDI PRO CAPITAL works with management and product teams to implement the approved initiative.
9. Measurement
SARDI PRO CAPITAL separates:
- Identified contribution
- Validated contribution
- Implemented contribution
- Realised contribution
10. Investor Reporting
SARDI PRO CAPITAL translates product progress into investor-grade operational and economic intelligence.
What Private Equity Boards Should Ask
Before approving a substantial product initiative, a board should ask:
- What economic role will this product perform?
- What direct margin is expected?
- What indirect contribution is expected?
- Which products or services will it enable?
- Which customers or markets will it open?
- Which revenues will it protect?
- What lifecycle costs will it create?
- What is its TPEC hypothesis?
- What evidence supports the assumptions?
- How will ethical, ESG and regulatory factors affect the economics?
- What is the capital requirement?
- What is the expected payback?
- What would invalidate the initiative?
- Who owns implementation?
- How will realised value be measured?
These questions do not suppress innovation.
They protect innovation from becoming disconnected from value creation.
A Practical TPEC Board Scorecard
A board-level TPEC scorecard can include:
Direct Economics
- Net product revenue
- Product gross margin
- Product contribution margin
- Fully loaded product cost
- Product working capital
Indirect Economics
- Pull-through revenue and margin
- Cross-sell contribution
- Attach rate
- Recurring revenue
- Installed-base value
- Customer lifetime contribution
Strategic Economics
- Gateway accounts created
- Markets enabled
- Migration revenue
- Platform reuse
- Pricing-power improvement
- Portfolio halo evidence
- Revenue protected
Lifecycle and ESG Economics
- Energy and resource efficiency
- Warranty and service cost
- Repair and upgrade revenue
- Supply-chain risk
- Product longevity
- Regulatory readiness
- End-of-life obligations
Investment Performance
- Development capital committed
- TPEC run rate
- TPEC lifetime value
- TPEC payback period
- TPEC return on innovation capital
- Realised versus expected contribution
The Essential Distinction
Not every product must maximise direct margin.
Every product must justify its role.
A Gateway Product must create economically valuable customer access.
An Enabling Product must enable measurable downstream contribution.
A Pull-Through Product must generate subsequent profitable demand.
A Brand Elevator must produce evidence of pricing, preference or portfolio benefit.
A Platform Product must create reusable economics.
A sustainability initiative must produce measurable impact and credible strategic relevance.
A product that cannot explain its direct or indirect contribution should not receive unlimited capital because it appears innovative.
Innovation is not the objective.
Enterprise value is the objective.
Product innovation is one of the most powerful ways of creating it—when the economic logic is explicit.
Key Takeaways
- There is no successful innovation without economic logic.
- In product-centred companies, the product is the principal source of revenue, margin, customer access and future growth.
- Direct product margin is essential but insufficient.
- Products can perform gateway, bridge, enabling, pull-through, cross-sell, platform, defensive and brand-elevation roles.
- Total Product Economic Contribution measures direct and indirect product economics.
- TPEC is a SARDI PRO CAPITAL managerial framework, not an audited accounting standard.
- TPEC can function as the EBITDA view of the product.
- Every material initiative must pass through both COGS logic and TPEC logic.
- Production ethics, longevity, ESG and SDG relevance belong inside product strategy.
- Sustainability claims must be evidence-based and economically connected.
- Every significant product initiative must connect to a relevant strategic or financial objective.
Frequently Asked Questions
What is Total Product Economic Contribution?
Total Product Economic Contribution is a managerial framework that measures the direct, indirect, strategic and lifecycle economic contribution of a product across the company and its portfolio.
Is TPEC an accounting standard?
No. TPEC is not an IFRS or GAAP measure. It is a SARDI PRO CAPITAL management and investment-decision framework that should be reconciled with recognised financial metrics.
Why is direct margin insufficient?
Some products enable additional sales, create customer access, generate recurring revenue, protect existing accounts, reinforce the brand or reduce future development costs.
What is a Gateway Product?
A Gateway Product is an entry product that acquires a customer or opens an account, creating opportunities for subsequent higher-value sales.
What is a Pull-Through Product?
A Pull-Through Product generates future purchases such as consumables, services, accessories, upgrades or complementary products.
What is pull-through margin?
Pull-through margin is the incremental contribution margin generated by purchases that occur because the initial product was sold or installed.
What is a Brand Elevator?
A Brand Elevator is a product that increases perceived company capability, strengthens positioning or raises the price potential of the wider portfolio.
How does TPEC relate to COGS?
COGS explains the direct economic feasibility of producing a product. TPEC evaluates the product’s complete direct and indirect contribution to the business.
How does ESG affect product economics?
ESG factors can affect product cost, market access, supply-chain continuity, customer qualification, regulatory exposure, pricing power, product longevity and exit readiness.
Which SDGs are most relevant to industrial products?
The most commonly relevant goals are SDG 8, SDG 9, SDG 12 and SDG 13, although relevance depends on the product, market and evidence available.
About Enrique Luis Sardi
Enrique Luis Sardi is an entrepreneur, strategic designer and founder of SARDI.
His work focuses on industrial product strategy, stakeholder-centred development, Product Intelligence and the creation of physical products that connect market relevance, product execution and business value.
Through SARDI and FORMULA SARDI, Enrique Luis Sardi has developed an evidence-led approach to meaningful product development.
About SARDI PRO CAPITAL
Founded by entrepreneurs Enrique Luis Sardi and Adrian Soto, SARDI PRO CAPITAL is a specialised spin-off of SARDI.
SARDI PRO CAPITAL is the Product Operating Partner for private equity firms and product-centred portfolio companies.
SARDI PRO CAPITAL connects product intelligence, COGS logic, Total Product Economic Contribution, strategy and hands-on execution to improve margin, development speed, market relevance, sustainable growth and enterprise value.
SARDI PRO CAPITAL — The Product Side of Investment Performance.
