Selling wholesale means selling in bigger quantities to retailers, who then sell to customers at a higher price. Volumes are higher and the work per unit is lower, but the margin per unit is smaller. A wholesale price that is not worked out carefully can leave you busy and unprofitable. This guide shows how to build one.
Think in three prices
Every wholesale product has three numbers that matter: your cost, your wholesale price and the retail price the shop will charge. The retailer needs a margin that makes stocking you worthwhile, and you need yours. Many retailers look for around 50% on the retail price, a pattern often called keystone pricing, where the shop doubles the wholesale price to reach retail. It is a convention, not a rule, and norms differ by category.
A worked example
Say a product costs you 12 to make. You sell wholesale at 24, which is a 50% margin for you, since 12 ÷ 24 is half. The shop adds its keystone markup and sells at 48, earning 50% of the retail price. Your profit per unit is 12. On an order of 25 units, that is 300 for the order. Whether it is worth doing depends on what else that order costs you: packing, shipping, invoicing, payment delays and the time it takes.
Start from the wholesale price, not the retail price
A common mistake is to set a retail price and then offer half of it to shops. If your costs are close to half your retail price, wholesale margin vanishes. Work backwards instead: decide the wholesale price you need from the cost and your margin, then set the suggested retail price above it. Use our wholesale price calculator to go from retail price to wholesale price, and the wholesale margin calculator to check your profit.
Set minimum orders
Small orders cost nearly as much to process as large ones. A minimum order value or quantity keeps wholesale worthwhile. Choose a level that covers your packing, shipping and admin time and still leaves a profit, and make it easy to understand, for example a minimum of 300 or 24 units per order.
Consider tiered pricing
Larger orders can earn a better price, but each tier should still work. Check your margin at every level. If the lowest tier gives you only a thin margin, make sure the volume is genuinely larger to justify it. Our guide on discounts explains how to test a volume discount.
Count the costs that are specific to wholesale
Wholesale often has lower selling costs, since there are no marketplace fees or advertising per unit, but it brings its own: bulk packaging, freight, longer payment terms, returns and damaged goods allowances, and the cost of carrying more stock to fill large orders. Offering Net 30 on a large order means you finance the buyer for a month. Our guide on payment terms shows how to set them.
Protect your retail channel
If you also sell direct, think about how the prices compare. A shop that sells your product at 48 will not be pleased to find it on your website at 36. Many brands keep their own retail price in line with the suggested price, and some use minimum advertised price policies to protect shops. Rules about price policies differ between countries, so check what is allowed where you sell.
Create a simple line sheet
Retailers expect a line sheet: a short document listing your products with pictures, codes, wholesale and suggested retail prices, minimum order, lead times, payment terms and contact details. Include your SKU for each product, which makes ordering easier. See our guide on SKU systems.
Taxes and paperwork
Wholesale transactions are often treated differently for sales tax or VAT, for example when the buyer provides a resale certificate or tax number. Ask for the right details and record them on the invoice. The rules vary a great deal, so confirm them with an accountant.
Check your capacity
A large order is only good news if you can fill it. Consider the stock, the production time and the cash needed to produce it. If a big order needs you to buy materials upfront, a deposit can protect you. See deposits and milestone billing.
Review regularly
Costs and retailer expectations change, so revisit your wholesale prices at least once a year. This guide is general information, not financial advice.
