Wholesale price calculator

Two businesses, two margins

Wholesale price formulas

A supplier's wholesale price becomes the retailer's product cost. One pricing decision therefore must leave enough gross profit for both sides without confusing markup with margin.

Virginia Tech Extension gives the same cost-divided-by-one-minus-margin formula for a minimum selling price. The University of Maine explains that margin is profit divided by selling price, while markup on cost uses cost as the denominator. See Virginia Tech's pricing guide and the University of Maine pricing bulletin.

Build the cost first

Use the cost of fulfilling the wholesale order

Product cost alone can understate the amount each unit must recover. Add packaging, inbound freight and other costs that vary by unit. Then allocate wholesale-order costs—such as pick-and-pack labor or order-specific paperwork—across the quantity in that order.

If an order costs 100 in total to prepare and contains 100 units, the calculator adds 1 per unit. If the buyer orders only 25 units, the same fixed cost adds 4 per unit. That is why minimum order quantities can matter even when the product itself is unchanged.

Use landed cost per sellable unit as the product-cost starting point when inventory is imported. Do not add the same freight, duty or preparation cost twice.

Margin is not markup

Why a 50% markup is not a 50% margin

If true unit cost is 15 and wholesale price is 22.50, gross profit is 7.50. That is a 50% markup on cost, but only a 33.33% margin on the 22.50 sale. The dollar profit is identical; the percentage changes because the denominator changes.

Supplier and retailer example

Working forward from two target margins

With a true supplier cost of 14 and a 35% supplier gross-margin target, the calculated wholesale price is about 21.54. If the retailer needs a 50% gross margin, the suggested retail price is about 43.08.

The University of Oregon illustrates this two-step structure with a 20 product cost, a 40 wholesale price and an 80 retail price: both supplier and retailer have a 50% gross margin at those prices. It also warns that cost-based pricing alone does not show what customers will pay.

Worked wholesale/retail example: University of Oregon Lundquist College of Business.

What the result excludes

Gross profit is not net profit

The supplier margin shown here covers only costs entered in the calculator. It does not automatically include general overhead, sales commissions, payment terms, bad debt, returns, discounts, taxes or the cost of acquiring the retailer. The retailer calculation likewise excludes its rent, payroll, shrinkage, markdowns and transaction fees.

• Model discounts and free freight before promising them in a price list.
• Recalculate when order quantity changes the allocated cost per unit.
• Compare the suggested retail price with realistic market demand and positioning.
• Document whether quoted prices include shipping, taxes or other charges.