Should-have initiatives are just a step below must-haves. They are important to the product, project, or release, but they are not vital. If left out, the product or project still functions. However, if they are included, they add significant value.
“Should-have” initiatives are different from “must-have” initiatives in that they can be slated for a future release without impacting the current one. For example performance improvements, minor bug fixes, or new functionality, may be “should-have” initiatives. Without them, the product still works.
Another way of describing “could-have” initiatives is nice-to-haves. “Could-have” initiatives are not necessary to the core function of the product. Compared with “should-have” initiatives, they have much smaller impact on the outcome if they are left out.
So, initiatives that are placed in the “could-have” category are often the first to be deprioritized if a project in the “should-have” or “must-have” category ends up larger than expected.