HesapHanem

Wholesale Price Calculator

Enter the retail price and the retailer margin to find the wholesale price and the markup to retail.

Result

$30.00
$20.00
66.67%

How it is calculated

The tool works backwards from the shelf price. The retailer's margin is the share of the retail price kept as profit: margin = (retail − wholesale) ÷ retail. Solving for the wholesale price gives wholesale = retail × (1 − margin ÷ 100), with the margin typed as a percentage. The retailer's profit per unit is retail − wholesale. The markup is that profit as a percentage of the wholesale cost: markup = profit ÷ wholesale × 100. Retail price must be above zero and the margin from 0 up to, but not including, 100; at 100 the wholesale price would be zero and the markup undefined. The tool does not add taxes, shipping or discounts.

Worked example

An item will sell on the shelf for $50 and the retailer wants a 40% margin. Wholesale price: 50 × (1 − 0.40) = 50 × 0.60 = $30.00. Retailer profit: 50 − 30 = $20.00. Markup on cost: 20 ÷ 30 × 100 = 66.67%. The tool shows a wholesale price of $30.00, a retailer profit of $20.00 and a markup of 66.67%. A 40% margin on the shelf price therefore needs a markup of about two thirds on what the retailer paid.

Try this example →

Common mistakes

  • Mixing up margin and markup. A 40% margin is not a 40% markup; the same prices give a 66.67% markup, so using one in place of the other misprices the product.
  • Entering the margin as a decimal such as 0.4. The field takes a percentage, so 0.4 means 0.4% and the wholesale price comes out almost equal to the retail price.
  • Entering a retail price that already includes VAT or sales tax. The margin should be calculated on the price before tax, otherwise the wholesale price is too high.
  • Applying the margin to the wholesale cost instead of the retail price. Here the margin is a share of the retail price, so working from the cost gives a different answer.
  • Choosing a margin close to 100%. At 99.9% the wholesale price is only $0.05 on a $50 item and the markup reaches 99,900.00%, which is not a realistic deal.

Sources

About this calculator

Wholesale price is what a retailer pays a supplier for a product before reselling it at retail price, and it’s set so the retailer’s margin — the share of the retail price that is profit — works out to the retailer’s target. If margin is defined as (retail − wholesale) ÷ retail, then wholesale = retail × (1 − margin), and the markup back up to retail is simply retail ÷ wholesale minus one, expressed as a percentage.

Suppliers, product sourcing teams, and retailers use this calculation constantly when negotiating deals: a retailer knows what shelf price the market will bear and needs to work backward to the wholesale price they can afford to pay while hitting their margin target.

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