How to calculate wholesale price (2024)

FAQs

What is the formula for wholesale price? ›

Wholesale Price = Retail Price / 2

So, if you sell a product for $10 wholesale, the retailer would then sell it for $20 to its customers.

A good pricing strategy to use for wholesalers is a cost-plus pricing model. The price of the product is set by looking at all the costs for the specific product plus an additional profit margin. This could be 5% but also 50%.

The goal of wholesale pricing is to earn a profit by selling goods at a higher price than what they cost to make. For example, if it costs you $5 in labor and materials to make one product, you may set a wholesale price of $10, which gives you a $5 per unit gross profit.

Set Your Wholesale Price

The profit margin is the gross profit a wholesaler earns when an item is sold. Apparel retail brands typically aim for a 30 – 50 percent wholesale profit margin, while direct-to-consumer retailers aim for a profit margin of 55 – 65 percent, according to Shopify.

Since most wholesalers aim for 30% to 50% profit margins, try doubling your cost of goods as a starting point. This guarantees you a 50% profit margin. For example, if it costs $20 dollars to procure an item, sell it for $40. Just keep in mind the retail price when deciding your wholesale prices.

Here's an example: If your wholesale business buys 1000 products for $4,000, each product will cost $4. They might then sell these items in batches of 50 to retailers for a price of $400.

Wholesale margin is the difference between the product cost from a supplier or manufacturer and the price at which it is sold to a retailer or another intermediary in the distribution or supply chain.

Simply take the number of hours it took you to make the product, multiply it by your hourly rate, and that's how much you should charge for the item! For example, let's say that you spend 2 hours making a pair of earrings. Using an hourly rate of $12.50, you would charge $25 for the earrings ((2 x 12.50) = 25).

To arrive at an appropriate value, consider factors such as your profit margin, your competitors' pricing, and your customer's needs and expectations. The typical wholesale discount percentage is between 10% and 50%. However, the deduction ultimately depends on your business and the products you're selling.

How much less do you charge for wholesale? ›

Wholesale price = Break-even price x 2 or more. One way to account for profit when calculating your wholesale price is to multiply your break-even price by a certain amount (often by two). Another option is to add your desired profit directly to your break-even price.

Markup percentage is calculated by dividing the gross profit of a unit (its sales price minus its cost to make or purchase for resale) by the cost of that unit. If an item is priced at $12 but costs the company $8 to make, the markup percentage is 50%, calculated as (12 – 8) / 8.

Exploring profit margins on wholesale products

While the percentage range will vary depending on the product, wholesalers will usually make between 15% and 30% in profit, while retailers may typically make between 20% and 50% profit on the wholesale price when selling goods to consumers.

If you want to know how to determine pricing for a service, add together your total costs and multiply it by your desired profit margin percentage. Then, add that amount to your costs. Pro tip: Consider your costs, the market, your perceived value, and time invested to come up with a fair profit margin.

It is calculated by using the formula (Current Price / Base Period Price) × 100. According to data provided by the Ministry of Commerce & Industry, the WPI of India inflation in May 2022 is more than 15.88% in comparison to May. In April month, it had spiked to around 15.38.

Simply take the sales price minus the unit cost, and divide that number by the unit cost. Then, multiply by 100 to determine the markup percentage. For example, if your product costs $50 to make and the selling price is $75, then the markup percentage would be 50%: ( $75 – $50) / $50 = . 50 x 100 = 50%.