Wholesale Pricing Guide

Learn how to get your wholesale and retail pricing right, from the start.

Read more below, or download the free PDF guide.

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Table of Contents

Wholesale can be a really profitable and great way to increase your revenue stream. It's also helpful if your brand is relatively new and you're looking to build brand recognition while getting your products in front of a wider audience. It isn't always an easy process though, so before you jump in, I've put together some important initial questions to ask yourself to confirm wholesale is the right step for you. Use this guide to help answer these important questions.

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  • It's important to offer variety within your assortment in order to allow retailers to select products that align with the aesthetic of their store and appeal to their clientele. Having a developed line shows retailers that you’ve invested time into your collection and are serious about its future success.

  • You don't necessarily need to be able to produce mass quantities when you are just starting to wholesale, but it is important to have a real understanding of what your current capacity and ability to scale is. It's also important to evaluate your lead time in terms of getting products out to your stockists. While it is normal to have a longer lead time before your first order ships, retailers will expect that you'll be able to replenish best sellers rather quickly.

  • It's important to make sure you have a cohesive message across all your brand materials. This means having packaging that is thoughtfully considered and executed. It will be important for a shop owner to see you not only have beautiful products but also packaging that will look great on their shelves. This is something you should be thinking about even for your direct business and can really give added value to any product.

  • It's important to have a full understanding of what the true cost is to make each of your products. Be sure to figure in the cost of materials, labor, and overhead, and have some padding for future growth (such as a sales agent). I'll go into more detail on this in the next section. Knowing where you stand on costs will allow you to appropriately price your products from the start. It's important to be making a large enough profit for wholesaling to be worth it!

  • It's common for retailers to not pay till the order is ready to ship. For bigger retailers and department stores, they may even require a 30 - 90 day credit line from the start of your relationship with them. This means you'll need to find a way to cover all the production and material costs upfront. Take time to evaluate what you realistically can fund and use this as a measure of how large your initial wholesale launch should be.

Are you ready for wholesale?

Top Tip:
Receiving official POs from retailers may help with pulling lines of credit you may need.

What to account for before setting pricing

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    Materials

    Figure out the cost of any raw materials used to fabricate or repair your products.

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    Overhead

    Add up all of your business expenses, including rent, equipment, credit card fees, sales agent commissions, etc for the month or year, then divide by how many products you produce/purchase during that time frame to get an idea of the individual cost of overhead per item.

  • Labor

    Establish hourly wages for you and any employees, and multiply the hourly rate by the time it takes to create or process each item. Even if you are OK with not paying yourself for the time being, if you want to grow you will need to put a cushion in for future employees.

  • Shipping / Import taxes

    If you have your product manufactured, be sure to include any additional costs or tarrifsyou incurred to get the final product to your door. This is commonly referred to as the Total Landed Cost of an item.

Your Break-Even Cost Price

Cost Price = (Materials + Overhead + Labor)

OR

Cost Price = (Product Cost + Shipping + Overhead)

Getting your pricing right

Wholesale Price

Wholesale Price = Cost Price x 2 (or more)

Recommended Retail Price (RRP)

RRP (US) = Wholesale Price x 2 (or more)
Or
RRP (UK) = Wholesale Price x 2 (or more) x 1.2 (VAT)

How does your RPR compare?

  • Time to raise your price and increase your profit!

  • What should you do if you've followed my advice, set yourself up to actually make a healthy profit, but the retail price ends up being higher than you're comfortable with? I don't recommend you drop your prices much lower. Operating on a slim margin only leads to slow growth and resentment in your business.

    I've got you though! Here are some ideas you can think about instead:

    • Is there any way to negotiate with your manufacturer or get better pricing on your materials?
      Sometimes you assume the answer is no before even asking the question. Explain the situation clearly, and ask how your prices could decrease as you purchase bigger quantities. This helps you to plan more efficiently for the future.

    • Is there a way to increase the product's perceived value without having to drastically increase the retail price?
      Is there packaging that can be added that may not cost you much, but would really increase the value?
      Does your messaging on the products (hang tags, packaging, ect) explain clearly your unique selling point and why the item is priced the way it is?

    • When all else fails, and you don't think you can keep the item at the price it needs to be:
      Are there alternative products in the assortment where the price can be increased to make up for the slim margin on another?
      When you completed the exercises in the guide there may have been a few items that left you with padding room.
      Do you sell enough of them to make up for other items in the assortment?

    • If none of the above suggestions help - you may not be able to wholesale the item.
      If you can't figure in a healthy margin for both you and your stockists, you'll only be able to sell this item direct to consumers. Sorry, I know I can be tough sometimes, but I promise you'll thank me later!

Hi, I’m Rachel

I'm a business mentor and strategist based in St. Petersburg, Florida who empowers creative product-based entrepreneurs to solve their biggest challenges and scale rapidly through strategic planning. I have over 15 years of experience in the luxury goods industry and contemporary markets, holding key international commercial roles within icons such as Gucci, Bloomingdales, and Michael Kors.

  • Consider me the business partner you’ve always wanted. I’m your numbers girl with big ideas, a wholesale and retail expert, who knows how to analyze and strategize, while always supporting the creative integrity of your brand. We can work together to: establish your next goals review anything that may be holding you back create a wholesale & retail strategy for transformative growth celebrate your success!

  • There are loads of useful articles on wholesale, merchandising, buying, and strategy on my blog. You'll also find additional business-building guides. Everything can be found here.

  • Looking for personalized support to supercharge your growth and gain clarity on your most pressing challenges? Book in for a Power Hour with me and leave with a newfound motivation and a business-changing action plan.

Have questions?

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