Wholesale Price

Wholesale price

The wholesale price refers to the cost of a product from the manufacturer or distributor to the retailer. It plays a vital role in determining the final retail price of a product and the profitability of a business.

These prices are generally lower than the retail prices as the retailer aims to make a profit. The difference between the wholesale and retail prices is known as the markup, and it varies depending on the type of product and the business strategy of the retailer. In some cases, the markup may be as high as 100% or more, whereas in others, it may be just a few percent.

Wholesale price in e-commerce and retail

Businesses operating within the eCommerce or retail space use wholesale prices as a starting point to determine their retail prices. They take into account various factors such as production costs, overhead costs, and market demand to arrive at a price that is profitable while also being competitive. Retailers may also negotiate with manufacturers and distributors to get better wholesale prices, which can help to increase their profit margins.

Another important factor to consider when determining wholesale prices is the target market. Different market segments have different price sensitivities, and retailers must adjust their pricing strategies accordingly. For example, luxury brands may be able to charge higher prices as their target market is willing to pay a premium for the brand.

Wholesale prices also play a crucial role in pricing strategy for ecommerce and retail businesses. For example, businesses may choose to offer bulk discounts to wholesalers, or offer special deals for large volume purchases. This can help to increase sales and drive revenue, as well as attract new customers.

Summary

How to Calculate Wholesale Pricing: Profit Margin Formulas (2025)

Learn how to calculate wholesale pricing and steps you can take to create successful pricing strategies for your wholesale products.

Published on May 8, 2025

What is wholesale pricing?

Wholesale pricing is what you charge retailers who buy products in large volumes. Product prices are cheaper than retail because wholesalers rely on economies of scale to make money. 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.

Wholesale vs. retail pricing

How to calculate wholesale price

1. Research your market

2. Calculate your production costs

Cost of goods manufactured (COGM) is the total cost of making or purchasing a product, including materials, labor, and any additional costs necessary to get the goods into inventory and ready to sell, like shipping and handling. A product’s COGM can be determined with the following calculation: Total Material Cost + Total Labor Cost + Additional Costs and Overhead = Cost of Goods Manufactured

3. Set your profit margin

4. Consider additional costs

5. Use the wholesale pricing formula

Wholesale pricing methods and examples

Many different wholesale pricing strategies are available, but don’t fret—it’s not helpful to learn all of them if you’re new to selling wholesale. Instead, here are a few simple and easy-to-use methods you can use today.

Keystone pricing method

Absorption pricing method

Differentiated pricing method

Tips to set wholesale prices

Set a manufacturer’s suggested retail price

Consider a dual pricing strategy

• COGS: $15 to make one swimsuit
• Wholesale price: $30
• SRP: $75

Then, you’ll be able to calculate your wholesale and retail margin percentages:

• Your wholesale margin: 50% Wholesale Margin = $30 Wholesale – $15 COG / $30 Wholesale
• The retailer’s margin when they use your SRP: 60% Retail Margin = $75 Retail – $30 Wholesale / $75 Retail
• Your retail margin when you sell DTC: 80% Retail Margin = $75 Retail – $15 COG / $75 Retail

With the above wholesale and retail pricing strategy, you’re making a gross profit margin of 50% on your wholesale orders and 80% on DTC orders.

💡 Pro tip: Shopify merchants can create a B2B storefront from the same commerce platform that powers their ecommerce store and retail stores. Unify your inventory, customer, and order data to get one single source of truth—no matter where you’re selling (and who to).

Unify your wholesale and retail operations to reduce costs

New research shows retailers using unified commerce platforms see 22% lower total cost of ownership and more efficient inventory management across sales channels. Learn how connecting your wholesale and retail operations can improve your bottom line.

Think about sales volumes

When setting your wholesale prices, consider how much your retailer customers order. Lower wholesale prices for bulk orders can incentivize large customers. On the other hand, if you anticipate smaller order volumes, you may need to adjust your wholesale prices to maintain profitability.

Strategically align your pricing with expected sales volumes to balance competitive pricing and sustainable profit margins.

Minimum order quantities come into use if you need to sell a specific number of products to turn a profit. That might mean a minimum order quantity of 50 units—wholesalers must exceed this threshold to place an order.

💡Tip: Use Shopify’s B2B commerce functionality to set MOQs for wholesale customers who self-serve through your online storefront.

Review wholesale prices regularly

New competitors, cost-effective suppliers, and fluctuations in customer demand can all impact your wholesale pricing strategy.

That’s why it’s important to regularly audit and review your wholesale prices to ensure profitability and maintain a competitive edge. Remember to consider the cost of everything that goes into your products, as production costs can also change on a regular basis.

Manage wholesale pricing with Shopify

Now that you better understand the formulas used to calculate product pricing, it’s time to build your own wholesale pricing strategy.

Use the formulas above to create a costing chart you can plug numbers into each time you need to define pricing for a new product. You’ll be able to calculate financial metrics like the cost of goods, wholesale price, wholesale margin, retail price, and retail margin.

Shopify’s unified commerce platform makes selling wholesale and DTC from the same operating system easier than ever. Create a password-protected storefront to show your wholesale price lists for approved B2B buyers through their account login, using the same inventory data that powers your DTC storefront.

“On Shopify Plus, our team has the liberty and the space to build relationships with customers, instead of just transacting with them,” says Nicolas Lukac, director of emerging channels at Brooklinen. “We spend more time understanding our customers and less on manual inputs. This allows us to provide exceptional experiences for our DTC, B2B customers and retail customers alike.”

Instant demo: See Shopify POS in action

Discover how Shopify POS helps you manage in-store and online sales from one powerful platform.

Read more

• 20 Best Mobile Retail Apps to Seamlessly Run Your Store
• What is an EPOS System and How Does it Work?
• How to Build a Brand Story for Your Retail Store in 2024
• What Is Inventory Management? How to Manage and Improve Stock Flow
• Pop-Up Shop Ideas: 19 Examples from Real-World Retailers
• How to Build Your Own Homemade Business With Craft Kits
• The Future of Payments: How Credit Card Processing Works
• How to Calculate Retail Conversion Rate: +7 Tips
• How Retailers Can Create and Execute a Wholesale Strategy
• Vision Board for Business: Use This Creative Tool to Accomplish Your New Year’s Resolutions