What is keystone pricing?
Keystone pricing means the store sells your product for double what it paid you. The wholesale price times two is the shelf price, and the store keeps half of every sale.
Keystone pricing meaning
In keystone terms, a 100% markup on cost is the same thing as a 50% margin on the shelf price. If a store pays you 5 for a jar and sells it for 10, that is keystone. It is one of the terms in our wholesale glossary, and it is shorthand many store owners still use.
The two words get mixed up all the time, which is why wholesale margin has its own page.
How to work it out
- Start from the shelf priceFind what your product should sell for, next to what is already on that shelf.
- Halve itThat is your wholesale price under keystone.
- Check it covers youYour cost to make and deliver it, plus your own margin, must fit under that wholesale price. If it does not, the price or the channel is wrong.
Does food and drink work at keystone?
Sometimes. Gift shops, delis and specialty food stores often expect something close to keystone. Grocery and supermarkets usually work on thinner margins, and fast-moving lines like drinks often sit well below it. Cafés and bars price by the serve, so they think about cost per cup or glass rather than shelf margin.
Distributors change the maths again, because they take their own cut between you and the store. Build your price backwards from the shelf, with every step in between, before you quote anyone.
Do the numbers once
The wholesale price calculator works out your price, the store's margin and the shelf price together, with or without a distributor. Put the result on your line sheet, and if you are weighing up a broker, read food broker vs outreach.
Questions brands ask
What does keystone mean in retail?
Selling at double the wholesale price. The store's markup is 100% and its margin is 50%.
Is keystone a 50% or 100% markup?
A 100% markup on cost, which is a 50% margin on the shelf price. Same price, two ways of describing it.
Do grocery stores use keystone pricing?
Usually not. Grocery margins are often lower than keystone, while specialty and gift stores tend to be closer to it.
How do I set a wholesale price?
Start from a realistic shelf price, take off the store's margin and any distributor's cut, and check what is left covers your costs and your own margin.
Read next
- GlossaryWholesale marginThe share of the shelf price a store keeps, how to work it out, and why it is not the same as markup.
- Free toolsWholesale price calculatorYour margin, the store's margin and the shelf price, with or without a distributor.
- CompareFood broker vs outreachWhat a food broker does, what your own outreach does, and the order most brands use them in.