Wholesale vs Retail Tiered Pricing Calculator

When a maker sells through shops, there are two prices to get right: the one the shop pays and the one the customer sees. The first must leave you a margin after your costs. The second must leave the retailer a margin after theirs, or they will not stock your product. This page builds both prices from your cost and the two margins, then adds a table of quantity discounts so you can see what each break leaves each side.

From cost to wholesale price

You enter your landed cost per unit, the margin you want on the wholesale price, and the margin the retailer expects on the shelf price. Your wholesale price is cost ÷ (1 − your margin). A cost of 12 with a 40% margin gives 12 ÷ 0.6 = 20.00 and a profit of 8.00 a unit. Landed cost should include the product, packaging and freight to your door, because any cost you leave out comes straight out of the margin.

From wholesale to shelf

The suggested shelf price is the wholesale price ÷ (1 − the retailer’s margin). With the traditional keystone rule of a 50% retailer margin, the shelf price is double the wholesale price: 40.00 in the default case. The retailer’s markup on what they pay is then 100%, and the shelf price is 3.33 times your cost. Those two lines show how far a product’s price stretches along the chain, which is useful when you decide whether a shelf price is realistic for your market.

Quantity price breaks

Enter breaks as lines of units and discount percentage. The default is 1 unit at 0%, 24 at 5%, 100 at 10% and 500 at 15%. The table prices each break off the wholesale price. At 24 units the price is 19.00, your profit 7.00 and your margin 36.84%, while the retailer’s margin at the unchanged 40.00 shelf price rises to 52.50%. At 100 units it is 18.00, 6.00, 33.33% and 55.00%. At 500 units it is 17.00, 5.00, 29.41% and 57.50%. Seeing your margin slide as theirs grows helps you decide where a discount stops being worth it.

A thin-margin product

The second sample has a cost of 6.40, a 25% margin for you and a 35% margin for the retailer. The wholesale price is 8.53 and your profit 2.13. The shelf price is 13.13 and the retailer’s markup 53.85%, with the shelf price at 2.05 times your cost. With discounts of 3% at 50 units and 6% at 200, the wholesale price falls to 8.28 and 8.02, and your margin to 22.68% and 20.21%.

Edge cases

A cost of zero or less is rejected, and margins must be below 100%. Discount lines need a unit count above zero and a discount from 0 up to just under 100. Lines are sorted by units, so you can enter them in any order. Prices round to the cent for display, so a price multiplied by quantity may differ from an exact figure by a cent or two.

Limits

Everything is before tax, duties, freight to the shop and payment terms. The retailer’s real costs, returns allowances, marketing funds and minimum order quantities are not modelled, and a retailer may also negotiate a lower margin than the one you assume. Round the shelf price to a sensible price point and check what competing products sell for before you fix it.

Related tools

• Markup vs Margin Calculator converts between the two ways of stating a profit percentage.
• Profit Margin Calculator shows what margin one sale at any of these prices leaves.
• Bundle and BOGO Discount Margin Calculator tests promotions the retailer may ask you to fund.
• Discount Calculator turns a percentage reduction into the price a customer sees.