Setting Prices for Wholesale Customers
Wholesale can turn a small brand into a much bigger one, but only if the numbers work. Sell to shops and trade buyers at the wrong price and every new order quietly loses you money. Setting prices for wholesale customers starts with your true costs, leaves room for the retailer to profit too, and comes with clear terms that make you easy to buy from.
Key takeaways
- Start from your full cost per unit, including packaging, labor and a share of overheads, not just materials.
- Set your retail price first, then work back to a wholesale price that leaves both you and the retailer a fair margin.
- If the wholesale price does not cover your costs and a healthy profit, fix the product cost or the retail price before you sign stockists.
- Use minimum order quantities, case packs and clear payment terms to keep small orders profitable.
- Publish one consistent price sheet and review it at least once a year.
Late November is a smart time to sort out your wholesale pricing. Many retailers plan their spring buying in the first weeks of the new year, and trade shows and buyer meetings follow soon after. If your wholesale price sheet is ready in December, you can answer inquiries quickly and confidently instead of quoting on the spot and regretting it later.
A quick note: this article is general information about pricing, not financial, legal or tax advice. Rules on pricing agreements, sales tax and VAT vary by country, so check with a qualified professional for your situation.
Know your true cost per unit
Wholesale margins are thinner than direct sales, so there is very little room for a cost you forgot. Before you set any price, build a full cost per unit.
What to include
- Materials and components. Everything that goes into the product, including waste and offcuts.
- Packaging and labels. Retail-ready packaging, barcodes, hang tags and shipping cartons.
- Direct labor. Time to make, pack and quality check each unit, valued at a real hourly rate, even if it is your own time.
- Fulfillment. Pick and pack time, pallet or courier costs if you cover shipping, and any warehouse fees.
- Payment and platform costs. Card fees, invoicing costs and any wholesale marketplace commissions.
- A share of overheads. Rent, equipment, insurance, software and admin, spread across the units you expect to sell.
Common mistake
Leaving your own time out of the cost. Many makers price wholesale based on materials alone because they "pay themselves later." When orders grow and you need to hire help, the price suddenly cannot cover the wages. Count your labor from day one.
Check your break-even
Once you know your variable cost per unit and your fixed costs, you can see how many units you need to sell to cover everything. Break-even point in units equals fixed costs divided by (price minus variable cost per unit). Run it at your proposed wholesale price. If the number of units looks unrealistic for your capacity or your market, the price, the costs or the plan needs to change.
Work back from the retail price
Retailers need their own margin to pay rent, staff and their own overheads. Most will look at your suggested retail price and your wholesale price together and ask a simple question: can I make money on this?
Rule of thumb
Wholesale often sits around half of retail
A common starting point in many consumer product categories is a wholesale price of roughly 50% of the suggested retail price, sometimes called keystone pricing. Actual expectations vary widely by industry, product type and retailer, so ask your target stockists what they need.
Rule of thumb, varies by industry- Set your suggested retail price. Look at comparable products in the shops you want to sell to, and consider the value and quality you offer.
- Find a fair wholesale price. Apply the margin your target retailers typically expect. Ask a friendly shop owner or two if you are unsure.
- Compare it with your full cost. Subtract your cost per unit from the wholesale price to see your profit per unit, then divide by the wholesale price to get your wholesale margin.
- Decide if it works. If the margin is too thin to cover growth, mistakes and slow payers, you need to lower costs or raise the retail price.
- Protect your direct sales. Make sure your own website and shop sell at or near the suggested retail price, so stockists are not undercut by you.
Example
Theo makes small-batch hot sauce. His full cost per bottle, including ingredients, bottle, label, labor, packing and a share of overheads, is $3.20. Comparable sauces in delis sell for about $12, so he sets a suggested retail price of $12. At a wholesale price of $6, he earns $2.80 per bottle, a margin of about 47%, and the deli earns $6 per bottle. When a larger grocer asks for a lower price, he checks that he can still cover his costs at higher volume before agreeing to a case-pack discount. (All numbers are made up for illustration.)
Pro tip
Run the same math for your most expensive item and your cheapest one. Low-priced items often look fine on a percentage basis but earn so little per unit that small orders cost more to pick and ship than they make.
Set order minimums, case packs and volume tiers
Wholesale pricing is not just the price per unit. The terms around it decide whether each order is actually profitable.
Minimum order quantities and values
A minimum order, either a number of units or a total order value, makes sure every order covers your picking, packing and admin time. Set it high enough to be worthwhile for you, but low enough that a small independent shop can try your products without a big risk. Many brands set a lower minimum for first orders and a different one for reorders.
Case packs
Selling in fixed multiples, such as 6 or 12 of each item, simplifies packing and shipping. Choose case sizes that fit your shipping cartons and that a typical shop can sell through in a reasonable time.
Volume tiers
Volume discounts can win larger accounts, but only offer them where the bigger order genuinely saves you money, for example through lower shipping per unit or longer production runs. Always calculate your margin at the lowest tier before you publish it.
A wholesale price sheet template
Copy these columns into your price list. The amounts below are made-up examples:
| Product | SKU | Case pack | Wholesale price per unit | Suggested retail price | Price per case |
|---|---|---|---|---|---|
| Original hot sauce | HS-001 | 12 | $6.00 (example) | $12.00 (example) | $72.00 (example) |
| Smoked chili sauce | HS-002 | 12 | $6.50 (example) | $13.00 (example) | $78.00 (example) |
| Gift trio box | HS-GT3 | 6 | $15.00 (example) | $30.00 (example) | $90.00 (example) |
Under the table, list your minimum order, payment terms, delivery charges, lead times and how to place a reorder. A buyer should be able to place a first order from this one page without emailing you questions.
Agree payment terms that protect your cash flow
Wholesale customers often expect to pay on terms rather than upfront. That can stretch your cash, because you pay for materials and labor long before the invoice is settled.
- New accounts. Consider asking for payment upfront or on delivery for first orders, then offer terms once an account has paid reliably.
- Clear due dates. State the number of days to pay on every invoice and in your terms.
- Late payment. Explain what happens if invoices are late, such as pausing further orders. Check local rules on late payment interest before charging it.
- Deposits on large orders. For custom or very large orders, a deposit helps cover materials.
Common mistake
Saying yes to a big holiday order on long payment terms without checking your cash. A large December order can mean buying materials in November and not seeing payment until February. Map the cash timing before you accept, and ask for a deposit if needed.
Keep pricing fair and consistent
Offer the same price sheet and terms to similar customers, and write down any exceptions. Consistency builds trust with stockists, who often talk to one another. You can publish a suggested retail price, but in many places it is generally unlawful to force retailers to sell at a set price, so treat it as a recommendation and check competition rules with a professional if you are unsure.
Review your wholesale prices every year
Costs change, and your price sheet should keep up. Set an annual review date, ideally before your busiest buying season.
- Recalculate your full cost per unit using this year's actual material, labor and shipping costs.
- Check your margin on every product and every volume tier.
- Retire or redesign items that no longer earn enough.
- Give stockists clear written notice of any changes, with an effective date, and honor orders placed before it.
Pro tip
Keep a simple account sheet for each wholesale customer showing order history, average order size and how quickly they pay. It shows you which accounts deserve better terms and which ones cost more than they bring in.
Your wholesale pricing action checklist
- Calculate a full cost per unit, including your own labor and overheads
- Run a break-even check at your proposed wholesale price
- Set a suggested retail price based on comparable products
- Work back to a wholesale price that leaves both sides a fair margin
- Choose case packs, minimum orders and any volume tiers
- Write clear payment terms, with stricter terms for new accounts
- Build a one-page price sheet with all terms included
- Book an annual wholesale pricing review
Frequently asked questions
Can I sell wholesale for less than half of retail?
You can, but check your margin carefully. If your wholesale price only just covers costs, you have no room for discounts, damaged stock or slow payers. It may be better to raise the retail price or reduce costs first.
Should my website prices match my suggested retail price?
Generally yes. Selling far below your suggested retail price on your own site undercuts your stockists and can damage the relationship. Occasional promotions are normal, but tell stockists about them.
How do I handle a buyer who asks for a bigger discount?
Ask what they can offer in return, such as a larger order, a bigger case quantity or faster payment. Then check your margin at the new price before agreeing. If it does not work, it is fine to say no politely.
What about distributors?
Distributors usually need their own margin on top of the retailer's, which squeezes your price further. Run the numbers for the whole chain before you agree to a distributor deal.
Related reading
The bottom line
Setting prices for wholesale customers comes down to three things: know your full cost, leave a fair margin for both you and the retailer, and wrap the price in clear terms on minimums, case packs and payment. Put it all on one simple price sheet.
Finish your numbers before the new year buying season begins. You will quote with confidence, win stockists who can actually sell your products, and grow without every new order squeezing your margin.
