Pricing, margins and discounts
How to build a price list that works for you, a store and a distributor.
How do I set my wholesale price?
Start from your landed cost per unit, add the margin you need, and compare the result with the retail price shoppers will pay. A common starting rule is wholesale at about half of retail. If your cost makes that impossible, the problem is cost or retail price, not the discount.
How much margin does a retailer need?
Retailers set their own targets and they vary by category, so no single figure applies. The audit works from real quotes and shows what is left for you. Ask a few friendly store owners what margin they expect on products like yours before you finalize a price list.
How much margin does a distributor take?
The amount varies by distributor, category and volume, so SellToStores does not quote a standard figure. The audit works from your real quotes and shows what is left for you. Remember that the store still needs its own margin on top of the distributor's.
Why do I need a separate distributor price?
A distributor buys at a lower price than a store, because the distributor adds its own margin before selling to retailers. If you only have one price list, either the distributor or the store ends up with no margin. Build both from cost, so each step has room.
Should I offer volume discounts?
Volume discounts work when each tier is tied to a real saving, such as a full case or a pallet that ships cheaper per unit. Avoid discounting every order, because buyers learn to wait for offers. Keep tiers few and clear on your sell sheet.
Should I discount the first order?
A small opening incentive, such as a display or free shipping above a set amount, can win a first order. Deep discounts on the first order set a price the store will expect again. Tie any incentive to a clear condition and an end date.
What does freight do to wholesale margin?
Freight and handling reduce margin on every shipment, especially on small orders. Decide who pays: many brands offer free shipping above a set order size and charge freight below it. State the rule on your sell sheet so the buyer is never surprised.
How do I price sets, minis and gift packs?
Price each from its own costs. A mini has nearly the same packaging and labor as a full size, so its margin can be thin. Sets and gift packs often sell best in the fourth quarter. Quote them as separate items with their own case packs.
How do I price testers and samples?
Decide the rule in advance and write it down. Some brands include testers free with an opening order, some sell them at a discount and some ask the store to buy them. Count the cost of testers and samples as part of your cost of winning an account.
Can I raise wholesale prices later?
Yes, with notice. Tell accounts in writing how long the current price holds, such as 30 or 60 days, and the date the new list starts. Raising prices on existing stores without warning damages trust, so give them time to place an order at the old price.
More SellToStores answers
Related: Free retail audit
Answers about SellToStores come from this site's pages and terms. Everything else is general wholesale guidance with illustrative numbers, and regulatory points are not legal advice, so confirm them with the regulator or counsel.
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