Price to Retailer Calculator
This calculator helps you determine the price you should charge a retailer for your product, based on your cost per unit and your desired profit margin percentage.
Enter your total cost per unit and the percentage profit margin you wish to achieve.
Enter Your Costs and Margin
Understanding Pricing to Retailers
What is the Price to Retailer?
The "Price to Retailer" (also known as the wholesale price) is the price point at which a manufacturer, wholesaler, or distributor sells a product to a retailer. This price is lower than the final price the consumer pays, allowing the retailer to add their own markup.
Retailer Pricing Formula using Margin
A common way to calculate the price to charge a retailer based on a desired profit margin is:
Price to Retailer = Your Cost per Unit / (1 - Desired Profit Margin Percentage / 100)
This formula is useful when you know your cost and want to achieve a specific profit *percentage of the selling price*.
Alternative: Using Markup
Sometimes, pricing is based on markup (a percentage of your cost). The formula using markup is:
Price to Retailer = Your Cost per Unit * (1 + Desired Markup Percentage / 100)
Note that margin and markup are different. A 50% markup on cost is equivalent to a 33.33% margin on the selling price.
This calculator uses the **margin** percentage method as requested by the input fields.
Why is this important?
Setting the right price to retailer is crucial for your business's profitability and for ensuring retailers can make a profit selling your product, encouraging them to stock it. It needs to cover your costs, provide you a profit, and leave room for the retailer's markup.
Price to Retailer Examples
Here are 10 examples illustrating how the calculation works:
Example 1: Basic Product
Scenario: You make candles. Each candle costs you $5 to produce.
Inputs: Your Cost per Unit = $5.00, Desired Profit Margin (%) = 40%.
Calculation: Price = $5.00 / (1 - 40 / 100) = $5.00 / (1 - 0.40) = $5.00 / 0.60
Result: Price to Retailer ≈ $8.33
Conclusion: You should charge the retailer approximately $8.33 per candle to achieve a 40% profit margin.
Example 2: Low Margin Item
Scenario: You sell bulk screws. Your cost per box is $10.
Inputs: Your Cost per Unit = $10.00, Desired Profit Margin (%) = 15%.
Calculation: Price = $10.00 / (1 - 15 / 100) = $10.00 / (1 - 0.15) = $10.00 / 0.85
Result: Price to Retailer ≈ $11.76
Conclusion: To get a 15% margin, charge the retailer around $11.76 per box.
Example 3: Higher Margin Item
Scenario: You manufacture custom jewelry. Your cost per piece is $50.
Inputs: Your Cost per Unit = $50.00, Desired Profit Margin (%) = 60%.
Calculation: Price = $50.00 / (1 - 60 / 100) = $50.00 / (1 - 0.60) = $50.00 / 0.40
Result: Price to Retailer = $125.00
Conclusion: Charging the retailer $125.00 yields a 60% profit margin on the wholesale price.
Example 4: Imported Goods
Scenario: You import mugs. Cost per mug (including shipping, duties) is $3.20.
Inputs: Your Cost per Unit = $3.20, Desired Profit Margin (%) = 35%.
Calculation: Price = $3.20 / (1 - 35 / 100) = $3.20 / (1 - 0.35) = $3.20 / 0.65
Result: Price to Retailer ≈ $4.92
Conclusion: The wholesale price for the mug should be about $4.92.
Example 5: Digital Product (Low Cost)
Scenario: You sell software licenses. Your cost per license (transaction fees, support allocated) is $1.50.
Inputs: Your Cost per Unit = $1.50, Desired Profit Margin (%) = 80%.
Calculation: Price = $1.50 / (1 - 80 / 100) = $1.50 / (1 - 0.80) = $1.50 / 0.20
Result: Price to Retailer = $7.50
Conclusion: A wholesale price of $7.50 per license achieves an 80% margin.
Example 6: Perishable Item
Scenario: You grow organic strawberries. Cost per punnet is $2.10.
Inputs: Your Cost per Unit = $2.10, Desired Profit Margin (%) = 25%.
Calculation: Price = $2.10 / (1 - 25 / 100) = $2.10 / (1 - 0.25) = $2.10 / 0.75
Result: Price to Retailer = $2.80
Conclusion: Charge the retailer $2.80 per punnet.
Example 7: Service Pack
Scenario: You offer a maintenance service package to businesses, resold by IT firms. Your cost to provide the service is $150.
Inputs: Your Cost per Unit = $150.00, Desired Profit Margin (%) = 30%.
Calculation: Price = $150.00 / (1 - 30 / 100) = $150.00 / (1 - 0.30) = $150.00 / 0.70
Result: Price to Retailer ≈ $214.29
Conclusion: The wholesale price for the service pack is about $214.29.
Example 8: High-Cost Item
Scenario: You distribute specialized equipment. Your cost per unit is $1500.
Inputs: Your Cost per Unit = $1500.00, Desired Profit Margin (%) = 20%.
Calculation: Price = $1500.00 / (1 - 20 / 100) = $1500.00 / (1 - 0.20) = $1500.00 / 0.80
Result: Price to Retailer = $1875.00
Conclusion: The wholesale price for the equipment is $1875.00.
Example 9: Small Craft Item
Scenario: You make custom keychains. Your cost per keychain (materials, time) is $1.20.
Inputs: Your Cost per Unit = $1.20, Desired Profit Margin (%) = 50%.
Calculation: Price = $1.20 / (1 - 50 / 100) = $1.20 / (1 - 0.50) = $1.20 / 0.50
Result: Price to Retailer = $2.40
Conclusion: To achieve a 50% margin, you should charge retailers $2.40 per keychain.
Example 10: Bulk Item
Scenario: You sell bulk coffee beans. Your cost per pound is $6.50.
Inputs: Your Cost per Unit = $6.50, Desired Profit Margin (%) = 28%.
Calculation: Price = $6.50 / (1 - 28 / 100) = $6.50 / (1 - 0.28) = $6.50 / 0.72
Result: Price to Retailer ≈ $9.03
Conclusion: The wholesale price per pound of coffee beans should be about $9.03.
Frequently Asked Questions about Pricing to Retailers
1. What is "Your Cost per Unit"?
This is the total cost incurred by your business to produce or acquire one single unit of the product you are selling. It should include direct material costs, direct labor costs, and a portion of your overhead allocated per unit.
2. What is "Desired Profit Margin (%)"?
This is the percentage of the *selling price* (the price you charge the retailer) that you want to be profit. For example, a 40% margin means that for every dollar you charge the retailer, $0.40 is your profit.
3. How is margin different from markup?
Margin is calculated as a percentage of the selling price (Profit / Selling Price). Markup is calculated as a percentage of the cost (Profit / Cost). This tool uses the margin percentage for calculation.
4. Can I enter zero for my cost or desired margin?
You can enter zero for desired margin (though you wouldn't make a profit). Entering zero for cost isn't typically realistic for a physical product, but the calculator would technically work, although it might lead to an infinite price if you also desire a margin of 100%.
5. Why is the calculated price higher when the margin percentage increases?
To achieve a higher profit percentage *of the selling price*, the selling price itself must increase relative to your fixed cost. The higher the desired margin, the larger the difference between your cost and the price you charge the retailer needs to be.
6. What units or currency does this calculator use?
The calculator works with any consistent numerical unit. If your cost is in USD, the resulting price will be in USD. If your cost is in EUR, the result is in EUR. Just ensure consistency.
7. Does this price include the retailer's profit?
No, this calculator determines *your* selling price to the retailer (the wholesale price). The retailer will then add their own markup or margin on top of this price before selling it to the final consumer. This calculator only helps you determine your wholesale price.
8. What if my desired margin is 100%?
A 100% margin is theoretically impossible when your cost is greater than zero, as it would imply the entire selling price is profit, meaning your cost is zero. The formula would require division by zero (1 - 100/100 = 0). The calculator should prevent this or indicate an error.
9. Should I always use a margin calculation?
Not necessarily. The best pricing strategy depends on your industry, competition, and business model. Some businesses prefer calculating based on a standard markup, while others focus on achieving specific margin targets. This tool provides the calculation based on margin.
10. How accurate is the "Your Cost per Unit"?
The accuracy of the output depends directly on the accuracy of your input cost. Ensure you include all relevant direct and allocated indirect costs when determining your true cost per unit for reliable results.
