What is wholesale margin?
Wholesale margin is the share of the shelf price a store keeps after paying you. If a store buys at 6 and sells at 10, it keeps 4, a 40% margin.
How to work it out
Margin is worked out on the shelf price: (shelf price minus wholesale price) divided by shelf price. It is the number store owners mean when they say "what do I make on it?" and it is one of the terms in our wholesale glossary.
Your own margin is the same sum one step back: (your wholesale price minus your cost) divided by your wholesale price. Both have to work for a store to stock you and for you to stay in business.
Margin is not markup
Markup is worked out on cost: (shelf price minus wholesale price) divided by wholesale price. The same jar bought at 6 and sold at 10 is a 67% markup but a 40% margin. Mixing them up on a first call with a buyer is an easy way to sound new.
Keystone pricing, where the shelf price is double wholesale, is a 100% markup and a 50% margin.
Why buyers decide on it
A store's margin pays its rent and staff. Owners look at it before they taste anything, and then at whether the product will move. A good margin on a product that sits on the shelf is worth nothing to them.
Put the store's margin on your line sheet, next to the wholesale price and RRP. And when a distributor sits in the middle, remember it takes its own cut, which our guide to how to find a distributor covers.
Work it out in a minute
The wholesale price calculator takes any two of wholesale price, margin and shelf price and works out the third, with or without a distributor.
Questions brands ask
What is the difference between margin and markup?
Margin is profit as a share of the selling price. Markup is profit as a share of the cost. Buying at 6 and selling at 10 is a 40% margin and a 67% markup.
What margin do stores expect on food and drink?
It depends on the channel. Specialty and gift stores often expect close to 50%, while grocery and fast-moving drinks usually sit lower. Ask the store.
Should I put the store's margin on my line sheet?
Yes. Show the wholesale price, the RRP and the margin together, so the owner sees what they make without doing the sum.
How do I work out wholesale margin?
Take the wholesale price from the shelf price, then divide by the shelf price. Multiply by 100 for a percentage.
Read next
- GlossaryKeystone pricingDoubling the wholesale price to set the shelf price, and when it does and does not fit food and drink.
- Free toolsWholesale price calculatorYour margin, the store's margin and the shelf price, with or without a distributor.
- GlossaryLine sheetYour range, wholesale prices and how to order, in one place a store can order from.