A wholesale price is what you charge a retailer, worked out from what the product costs you. The formula is wholesale price = unit cost ÷ (1 minus your target margin), with overhead spread onto the unit cost first. The calculator below loads a real example: an $18 product plus $4,000 of overhead over 1,000 units costs $22, and a 45% margin prices it at $40.00, with an $80.00 RRP at the keystone 2x.
A free tool for the question every maker and brand asks before the first trade order: what should I charge a retailer?
Wholesale pricing goes wrong in a predictable way. Someone takes the supplier invoice, adds a percentage that feels right, and sends out a price list. Months later the margin report says the product barely pays for itself, because the rent, the packaging run and the freight never made it into the cost the price was built on, or because the percentage was a markup when everyone assumed it was a margin.
This calculator works the price out the other way round: from a full unit cost and the margin (or markup) you actually want to keep. It also gives you a suggested retail price, so you can check the number still works on the retailer’s shelf. The tool comes first; the formula, a worked example and the keystone convention follow.
Wholesale price calculator
What to enter and what you get back
The calculator takes five inputs:
- Unit cost: what one unit costs you to buy or make, before overhead.
- Target: whether the percentage you enter is a gross margin or a markup.
- Target %: the margin or markup you want to keep on each unit.
- Overhead: none, a fixed amount per unit, or a total spread over a number of units.
- RRP multiplier (optional): how many times the wholesale price the retailer will sell it for. 2 is the keystone convention.
It returns your selling price (the wholesale price), the profit per unit, the percentage you did not enter (enter a margin and you see the equivalent markup; enter a markup and you see the equivalent margin) and, if you gave a multiplier, the RRP. A margin of 100% or more is refused, because no price can reach it; markup has no ceiling.
How do you calculate a wholesale price?
A wholesale price is the price you sell to a retailer, distributor or other trade buyer, who then resells the product at a higher retail price. It has to cover everything the unit costs you and leave the profit you planned, while still leaving the retailer room to make their own margin.
The wholesale price formula
If you price to a target gross margin, which is how most businesses report profit:
Wholesale price = unit cost ÷ (1 minus target margin)
If you price to a target markup instead:
Wholesale price = unit cost x (1 + target markup)
Both give the same answer when the percentages are equivalent. They are not the same percentage: a 45% margin is an 81.8% markup, and a 50% markup is only a 33.3% margin. If you are not sure which one your team or your accountant means, the wholesale margin calculator page covers margin versus markup in detail.
Build overhead into unit cost first
The single biggest wholesale pricing mistake is dividing by the wrong cost. The supplier invoice or the bill of materials is not the full cost of a unit. Rent, packaging, a production run’s setup cost and inbound freight all have to be paid for by the units you sell, so they belong in the cost before you price.
The calculator handles this with its overhead setting. Enter a per-unit amount if you already know it, or a total and the number of units it covers, and it spreads the total evenly: overhead per unit = total overhead ÷ units. The price is then worked from unit cost plus that overhead.
Skip this step and the damage is easy to see. On the example below, pricing the bare $18 at a 45% margin gives $18 ÷ 0.55 = $32.73. Against the real $22 cost, that price keeps $10.73 a unit, a margin of about 32.8%, not the 45% you planned.
Worked example, step by step
This is the example the calculator loads:
- Unit cost: $18.00.
- Overhead: $4,000 in total, spread over 1,000 units.
- Target: a 45% gross margin.
- RRP multiplier: 2 (keystone).
First, the full unit cost. $4,000 ÷ 1,000 units is $4.00 of overhead per unit, so:
Unit cost = $18.00 + $4.00 = $22.00.
Then the wholesale price at a 45% margin:
Wholesale price = $22.00 ÷ (1 minus 0.45) = $22.00 ÷ 0.55 = $40.00.
Profit per unit is $40.00 minus $22.00 = $18.00. As a check, $18.00 ÷ $40.00 = 45%, the margin you asked for. The same $18.00 measured against cost is $18.00 ÷ $22.00 = 81.8%, which is the markup the calculator shows next to the price.
Finally, the retail price at keystone: RRP = $40.00 x 2 = $80.00. Load the calculator above and you should see exactly $40.00, $18.00 profit, an 81.8% markup and an $80.00 RRP.
What should the retail price be? The keystone 2x convention
Retailers need their own margin, and the traditional starting point is keystone pricing: the retail price is double the wholesale price. At the example’s $40.00 wholesale price, keystone gives an $80.00 RRP, and the retailer keeps $40.00 a unit, a 50% margin on their shelf price (a 100% markup on what they paid you).
Keystone is a convention, not a rule. Some categories run above it, and many retailers will ask for more room than 2x. Treat the RRP as a sanity check on your wholesale price: if $80.00 is more than shoppers will pay for this product, the problem is upstream, in the cost or the margin you are asking for, and it is better to find that out before the price list goes out. Change the multiplier to whatever your retailers work to and the calculator updates the RRP.
When a rough price is enough, and when to price properly
For a handful of products with steady supplier prices and one or two trade customers, working a price out once in this calculator and writing it on a price list is a perfectly good system. Revisit it when your costs move, and it will hold.
A one-off price starts to cost you when the inputs keep moving: supplier prices that change from order to order, freight and duty that vary per shipment, or different trade customers on different terms. Then the unit cost you priced off last quarter is no longer the cost you are paying, and a price that was a 45% margin in March quietly becomes something less. The fix is not a better formula; it is keeping the unit cost current and pricing from it again when it changes.
How Qoblex helps with wholesale pricing
The calculator gives you a price. Qoblex is where that price and the cost under it live once you are selling.
On the cost side, Qoblex recalculates unit cost the moment goods are received. Freight, duty and other charges on a purchase order are allocated across its line items by value, which raises the landed unit cost before costing sees it, so the cost you divide by is the one you actually paid. See inventory costing for how moving average cost (the default) and FIFO work.
On the price side, Qoblex’s B2B portal puts your catalogue behind a login, with each wholesale customer’s own prices on it. Price lists are assigned per customer, in their own currency, with their own discount, and the price on screen is the price that ends up on the invoice. For current plans, see qoblex.com/pricing.
Two related tools go the other way. If you already have a price and want to know the margin it gives, use the gross margin calculator. If your question is what margin you are really making at a given markup, use the wholesale margin calculator. For the wider strategy, read the guide to wholesale pricing.
FAQ
How do you calculate a wholesale price? Start from the full unit cost, including overhead, then divide by 1 minus your target margin. At a $22.00 unit cost and a 45% margin, the wholesale price is $22.00 ÷ 0.55 = $40.00. If you price to a markup instead, multiply: unit cost x (1 + markup).
What is the wholesale price formula? Wholesale price = unit cost ÷ (1 minus target margin) when you work to a gross margin, or unit cost x (1 + target markup) when you work to a markup. Both give the same price when the percentages are equivalent, for example a 45% margin and an 81.8% markup.
Should overhead be included in the unit cost? Yes. Rent, packaging, setup costs and inbound freight all have to be paid for by the units you sell. Spread them onto each unit before pricing: $4,000 of overhead over 1,000 units adds $4.00 a unit. Pricing an $18.00 product without it at a 45% margin gives $32.73, which is only about a 32.8% margin on the real $22.00 cost.
What is keystone pricing? Keystone pricing sets the retail price at double the wholesale price. A $40.00 wholesale price gives an $80.00 RRP, and the retailer keeps a 50% margin. It is a common starting point, not a rule, so set the calculator’s RRP multiplier to whatever your retailers work to.
What is the difference between cost price and wholesale price? Cost price is what one unit costs you, including overhead, and it is your break-even point. Wholesale price is what you charge a retailer: cost price plus the profit you keep. In the example, the cost price is $22.00 and the wholesale price is $40.00.
Does Qoblex set my wholesale prices for me? No. The price is your decision; this calculator helps you work it out. Qoblex keeps the unit cost current as goods are received, with freight and duty allocated into it, and lets you assign price lists per customer or customer group so each trade buyer sees their own prices.